287 (Author at Cato Institute) https://www.cato.org/ en Daniel J. Mitchell discusses tax reform on FBN’s After the Bell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-reform-fbns-after-bell-0 Wed, 30 Aug 2017 13:07:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-reform-fbns-after-bell-0 Daniel J. Mitchell discusses tax reform on FBN’s Mornings with Maria https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-reform-fbns-mornings-maria Wed, 30 Aug 2017 11:49:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-reform-fbns-mornings-maria Why Trump Should Start Paying for the Secret Service https://www.cato.org/publications/commentary/why-trump-should-start-paying-secret-service Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>The news that the Secret Service is way over budget because of President Donald Trump’s frequent vacations is a&nbsp;rich source of material for political satirists. It’s easy to zing Trump for being a&nbsp;hypocrite, as he previously complained about the cost and duration of President Barack Obama’s vacations. Trump is way ahead of his predecessor’s pace.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But let’s look at this issue from the perspective of taxpayers. Every time the president hops on Air Force One for a&nbsp;weekend getaway at one of his resorts, that involves a&nbsp;major shift of manpower by the Secret Service, along with major outlays for travel, lodging, and other costs. Now there’s talk of making the budget even bigger to accommodate all of Trump’s trips.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>It’s time to consider some sensible reforms that could limit the agency’s burden on taxpayers.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>With the prospect of even higher Secret Service costs, it’s time to consider some sensible reforms that could limit the agency’s burden on taxpayers.</p> <p>First, Congress should put an annual limit on expenditures for unofficial White House travel. Restricting the president’s ability to take taxpayer‐​funded vacations could be politically advantageous. According to a&nbsp;2013 Center for Economic and Policy Research report, the average American gets&nbsp;<a rel="noopener noreferrer" href="http://cepr.net/documents/publications/no-vacation-update-2013-05.pdf" target="_blank" data-reactid="223">10 paid vacation days a&nbsp;year</a>. Congress would likely get credit for bringing the president’s funded vacation time closer to that of the people he’s supposed to serve.</p> <p>Presidents are not average, of course, so they should get taxpayer‐​financed protection for around four weeks of vacation. Any more than that would still have a&nbsp;Secret Service detail, but the president would have to pick up the incremental expenses, either personally or (more likely) by having their political party or campaign committee cover the cost.</p> <p>There should also be similar restrictions for the presidential family, especially with regard to overseas business trips. If Trump’s children feel it is necessary to go overseas to sign a&nbsp;deal, then the company at the very least should pay half the cost for Secret Service protection. Congress could stipulate this when it writes its annual allocation of funds for the White House and the Department of Homeland Security, which runs the Secret Service.</p> <p>Another reasonable reform would be to permanently expand the Secret Service’s travel budget, but protect taxpayers by limiting the number of other administration staffers that go on junkets. He should be forced to cut in half the number of political advisors, speechwriters, and flunkies that have turned White House trips into costly boondoggles. It’s not ideal to have congressional spending bills micromanage White House operations, but that might become necessary if presidents don’t exercise good judgment on personal and business trips.</p> <p>None of these suggestions should be interpreted as attacks on Trump. They would be permanent reforms to address the systemic problem of wasteful spending and administrative bloat in Washington. This problem existed before the current president. And in the absence of reform, it will be an issue with future administrations.</p> </div> Thu, 24 Aug 2017 12:36:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/why-trump-should-start-paying-secret-service Daniel J. Mitchell discusses tax reform on FBN’s After the Bell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-reform-fbns-after-bell Mon, 21 Aug 2017 12:10:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-reform-fbns-after-bell Unleash Market Forces to Jumpstart Sluggish Economy https://www.cato.org/publications/commentary/unleash-market-forces-jumpstart-sluggish-economy Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>There are many jokes about economists (they’ve correctly predicted nine out of the past five recessions) and many of them are&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/01/23/are-economists-useless-despicable-and-loathsome-people/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2016/01/23/are-economists-useless-despicable-and-loathsome-people/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNFS3gGmMpGaUFkjwrMgB8bU2NMqWA">well‐​deserved</a>. Simply stated, we make lots of bad predictions, and we often can’t utter a&nbsp;sentence without endless caveats (hence, Truman’s jibe about wanting a&nbsp;one‐​armed economist so he didn’t have to hear “on the other hand…”).</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>What’s the recipe for higher productivity? Well, it’s not that complicated. We need more investment.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But one thing that presumably unites economists is that we all recognize higher productivity is a good thing. It’s what enables higher wages for workers, higher earnings for companies and higher living standards for the nation.</p> <p>So when we see weak productivity numbers, that’s not good news. According to Labor Department <a href="https://www.wsj.com/articles/u-s-productivity-rose-at-0-9-rate-in-second-quarter-1502282186" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.wsj.com/articles/u-s-productivity-rose-at-0-9-rate-in-second-quarter-1502282186&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNEsTtgKT7dY8wgA3mE97C82HkJ46A">data</a>, there is a very worrisome trend this century. Productivity is increasing, but at ever-lower rates, which helps to explain why the overall rate of economic growth this century has lagged compared to the post-World War II average.</p> <p>So what’s the recipe for higher productivity? Well, it’s not that complicated. We need more investment. Specifically, we need more “physical capital,” since workers can <a href="https://danieljmitchell.wordpress.com/2012/04/22/if-you-want-to-understand-why-obamas-tax-agenda-is-bad-for-workers-this-picture-says-a-thousand-words/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2012/04/22/if-you-want-to-understand-why-obamas-tax-agenda-is-bad-for-workers-this-picture-says-a-thousand-words/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNHjP78G32VbjS8aqgjyyTEeFx9GXA">produce more and earn more</a> when they work with newer and better machinery, equipment and technology. We also need more “human capital,” since a better educated workforce has a greater ability to produce and therefore earn.</p> <p>The desire for more investment is one of the reasons why tax reform could be so beneficial. Many people focus on how a lower corporate tax rate will make the United States more competitive in a global economy. That’s certainly true, but <a href="https://danieljmitchell.wordpress.com/2014/01/02/boost-worker-pay-and-make-the-united-states-more-competitive-by-gutting-the-corporate-income-tax/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2014/01/02/boost-worker-pay-and-make-the-united-states-more-competitive-by-gutting-the-corporate-income-tax/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNGVbgChEWGyDW3Z_XnmZfGsq6Ttxw">a key reason</a> for a lower rate is that investors will have a bigger incentive to finance new projects that will boost productivity and thus boost wages.</p> <p>Similarly, the proposal by House Republicans to replace “depreciation” with “expensing” would be <a href="https://danieljmitchell.wordpress.com/2013/04/04/identifying-the-right-depreciation-tax-policy-the-most-boring-but-important-article-you-will-read-today/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2013/04/04/identifying-the-right-depreciation-tax-policy-the-most-boring-but-important-article-you-will-read-today/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNHOZzJNMikMsW4ipEhEd94Ir29PsQ">particularly helpful</a> since the current approach imposes an unwarranted tax on new investments.</p> <p>It also would be a good idea to reduce or eliminate the <a href="https://danieljmitchell.wordpress.com/2014/11/02/the-overwhelming-case-against-capital-gains-taxation/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2014/11/02/the-overwhelming-case-against-capital-gains-taxation/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNGPnWQYUWfYd0eG0UDh7qtrdeOrjw">capital gains tax</a> and <a href="https://danieljmitchell.wordpress.com/2013/01/05/the-only-good-death-tax-is-a-dead-death-tax/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2013/01/05/the-only-good-death-tax-is-a-dead-death-tax/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNGSzTDyn52aaGzw_jw7U3SHK36HBQ">death tax</a> since those levies contribute to a system that imposes <a href="https://danieljmitchell.wordpress.com/2015/04/14/tax-policy-double-taxation-tax-reform-and-the-proper-definition-of-income/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2015/04/14/tax-policy-double-taxation-tax-reform-and-the-proper-definition-of-income/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNEr21J51w0EgPb1bg3RgMitMnpj2Q">disproportionate burdens</a> on income that is saved and invested compared to income that is immediately consumed.</p> <p>Regulatory reform also would be helpful. Many regulations impose high costs on investors, entrepreneurs and business owners. Such added costs can be justified if there are compensating benefits, but much of the red tape that now exists does not pass a cost-benefit test.</p> <p class="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="00791b15-e9d6-43dd-9312-89dad210fb87" data-langcode="en" class="embedded-entity"> <img width="526" height="550" alt="Media Name: hill-issa.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/hill-issa.jpg?itok=JUUS_ZUn 1x, /sites/cato.org/files/styles/pubs_2x/public/hill-issa.jpg?itok=Ua9x1RQ5 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/hill-issa.jpg?itok=JUUS_ZUn" typeof="Image" /></div> <p>It’s important not to overlook human capital. The United States <a href="https://danieljmitchell.wordpress.com/2013/06/26/by-global-standards-the-government-education-bureaucracy-gets-the-most-money-while-delivering-mediocre-results/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2013/06/26/by-global-standards-the-government-education-bureaucracy-gets-the-most-money-while-delivering-mediocre-results/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNFm4nHgijCw1z_Z-Ht_IyazIHFIUQ">spends more</a> on education — on a per-pupil basis — than other nations. Yet, international test scores show that we get very mediocre results. We see a <a href="https://danieljmitchell.wordpress.com/2017/03/08/more-funding-for-government-schools-throwing-good-money-after-bad/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2017/03/08/more-funding-for-government-schools-throwing-good-money-after-bad/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNGa5zFpuz4EE2mQ06Jq_PF7UcLBUg">similar pattern</a> inside the country, with high levels of spending associated with <a href="https://danieljmitchell.wordpress.com/2009/10/15/a-picture-is-worth-a-thousand-words/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2009/10/15/a-picture-is-worth-a-thousand-words/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNHbJFYXkchkRU8vRgnZ_3r4QzNaUQ">more bureaucracy</a> rather than better outcomes.</p> <p>Perhaps it’s time to unleash the power of markets by allowing greater school choice. There’s certainly <a href="https://danieljmitchell.wordpress.com/2013/04/22/powerful-evidence-for-school-choice-2/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2013/04/22/powerful-evidence-for-school-choice-2/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNHfHPrFbRM0LX33Ena1J6GtEEzWrQ">plenty of evidence</a> that this approach will be more effective at boosting human capital compared to government-run schools.</p> <p>I would add another point: We also need more <a href="https://danieljmitchell.wordpress.com/2015/01/22/social-capital-the-welfare-state-and-the-threat-to-american-exceptionalism/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2015/01/22/social-capital-the-welfare-state-and-the-threat-to-american-exceptionalism/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNFkEBQv_qZUJpugxTradO2R2qfgug">social capital</a> or cultural capital. By this, I mean that the economy will do better and enjoy higher productivity if we have a stronger work ethic and a greater spirit of self-reliance, which explains why a growing welfare state is very corrosive to a nation’s long-run prosperity.</p> <p>By the way, none of this should be partisan. The United States enjoyed rising levels of economic freedom (and rising levels of productivity) under both <a href="https://danieljmitchell.wordpress.com/2016/05/12/was-reaganomics-a-success/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2016/05/12/was-reaganomics-a-success/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNENYwHIgam4W4LCK5aTgnNV8eKtEA">Ronald Reagan</a> and <a href="https://danieljmitchell.wordpress.com/2013/03/14/senator-patty-murray-is-right-and-completely-wrong-about-the-1990s/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2013/03/14/senator-patty-murray-is-right-and-completely-wrong-about-the-1990s/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNGfcUeelaH7j4DKuqZbbw3V2Eqm8g">Bill Clinton</a>. Conversely, economic freedom and productivity growth have <a href="https://danieljmitchell.wordpress.com/2016/09/16/the-decline-of-economic-liberty-during-the-bush-obama-years/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://danieljmitchell.wordpress.com/2016/09/16/the-decline-of-economic-liberty-during-the-bush-obama-years/&amp;source=gmail&amp;ust=1503000897958000&amp;usg=AFQjCNFwR97E6DV3PCdTJErYYGRoko126A">declined</a> during the government-centric policies of George W. Bush and Barack Obama.</p> <p>What matters is the direction of policy, not whether politicians have an “R” or “D” after their names.</p> </div> Thu, 17 Aug 2017 15:11:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/unleash-market-forces-jumpstart-sluggish-economy Daniel J. Mitchell discusses several topics on FBN’s After the Bell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-several-topics-fbns-after-bell-0 Wed, 16 Aug 2017 10:53:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-several-topics-fbns-after-bell-0 Republicans Embrace Bad Economics and Bad Policy https://www.cato.org/blog/republicans-embrace-bad-economics-bad-policy Daniel J. Mitchell <p>To be blunt, Republicans are heading in the wrong direction on fiscal policy. They have full control of the executive and legislative branches, but instead of using their power to promote <a href="https://danieljmitchell.wordpress.com/2016/05/12/was-reaganomics-a-success/">Reaganomics</a>, it looks like we're getting a reincarnation of the <a href="https://danieljmitchell.wordpress.com/2010/04/10/bush-was-a-statist-not-a-conservative/">big-government Bush years</a>.&#13;<br /> &#13;<br /> As Yogi Berra might have said, "it's déjà vu all over again."&#13;<br /> &#13;<br /> Let's look at the evidence. According to <em>The</em> <em>Hill</em>, the <a href="https://danieljmitchell.wordpress.com/2014/12/22/the-final-nail-in-the-keynesian-coffin/">Keynesian virus</a> <a href="http://thehill.com/policy/finance/345957-gop-debates-retroactive-tax-cuts">has infected</a> GOP thinking on tax cuts.&#13;<br /> &#13;</p> <blockquote><p>Republicans are debating whether parts of their tax-reform package should be retroactive in order to boost the economy by quickly putting more money in people’s wallets.</p> </blockquote> <p>That is nonsense. Just as giving people a check and calling it "stimulus" <a href="https://danieljmitchell.wordpress.com/2011/08/24/is-obama-really-going-to-propose-another-keynesian-stimulus/">didn't help the economy</a> under Obama, giving people a check and calling it a tax cut won't help the economy under Trump.&#13;<br /> &#13;<br /> Tax cuts boost growth when they <a href="https://danieljmitchell.wordpress.com/2016/02/07/the-super-bowl-and-marginal-tax-rates/">reduce the marginal tax rate on productive behavior</a> such as work, saving, investment, or entrepreneurship. When that happens, people have an incentive to generate more income. And that leads to more national income, a.k.a., economic growth.&#13;<br /> &#13;<br /><a href="https://danieljmitchell.wordpress.com/2017/02/03/just-say-no-to-the-debilitating-drug-of-keynesian-stimulus/"><br /><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="99825a37-d0d5-469b-b4b1-4c7b732e2b54" class="align-right embedded-entity" data-langcode="und"> <img srcset="/sites/cato.org/files/styles/pubs/public/download-remote-images/redpanels.com/217224583510/economic-stimulus-comic.png?itok=tnf6_Mm_ 1x, /sites/cato.org/files/styles/pubs_2x/public/download-remote-images/redpanels.com/217224583510/economic-stimulus-comic.png?itok=sdtj_HKR 1.5x" width="700" height="253" src="/sites/cato.org/files/styles/pubs/public/download-remote-images/redpanels.com/217224583510/economic-stimulus-comic.png?itok=tnf6_Mm_" alt="Media Name: economic-stimulus-comic.png" typeof="Image" class="component-image" /></div> </a></p> <p>Borrowing money from the economy's left pocket and then stuffing checks (oops, I mean retroactive tax cuts) in the economy's right pocket, by contrast, simply reallocates national income.&#13;<br /> &#13;</p> <p>Indeed, this is one of the reasons why the economy <a href="http://www.nysun.com/opinion/tale-of-two-tax-cuts/15467/">didn't get much benefit from the 2001 Bush tax cut</a>, especially when compared to the <a href="https://danieljmitchell.wordpress.com/2010/05/16/excellent-defense-of-supply-side-economics/">growth-oriented 2003 tax cut</a>. Unfortunately, Republicans haven't learned that lesson.&#13;<br /> &#13;</p> <blockquote><p>Republicans have taken steps in the past to ensure that taxpayers directly felt the benefits of tax cuts. As part of the 2001 tax cuts enacted by President George W. Bush, taxpayers received rebate checks.</p> </blockquote> <p>The article does include some analysis from people who understand that retroactive tax cuts aren't economically beneficial.&#13;<br /> &#13;</p> <blockquote><p>...there are also drawbacks to making tax changes retroactive. ...such changes would add to the cost of the bill, but would not be an effective way to encourage new spending and investments. “It has all of the costs of the tax cuts but none of the economic benefits,” said Committee for a Responsible Federal Budget President Maya MacGuineas, who added that “you don’t make investments in the rear-view mirror.”</p> </blockquote> <p>I'm <a href="https://danieljmitchell.wordpress.com/2011/05/07/do-budget-deficits-threaten-american-competitiveness-dan-mitchell-vs-the-establishment/">not always on the same side</a> as Maya, but she's right on this issue. You can't encourage people to generate more income in the past. If you want more growth, you have to reduce marginal tax rates on future activity.&#13;<br /> &#13;<br /> By the way, I'm not arguing that there is no political benefit to retroactive tax cuts.<a href="https://danieljmitchell.wordpress.com/2014/03/09/making-fun-of-keynesian-economics/"><br /><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="1f77f56e-fd3f-49bf-a5d4-ad2a54033b67" class="align-right embedded-entity" data-langcode="und"> <img srcset="/sites/cato.org/files/styles/pubs/public/download-remote-images/danieljmitchell.files.wordpress.com/224244340225/keynesian-fire1.jpg?itok=8JnsrpGr 1x, /sites/cato.org/files/styles/pubs_2x/public/download-remote-images/danieljmitchell.files.wordpress.com/224244340225/keynesian-fire1.jpg?itok=qE5xIO53 1.5x" width="500" height="450" src="/sites/cato.org/files/styles/pubs/public/download-remote-images/danieljmitchell.files.wordpress.com/224244340225/keynesian-fire1.jpg?itok=8JnsrpGr" alt="Media Name: keynesian-fire1.jpg" typeof="Image" class="component-image" /></div> </a></p> <p> If Republicans simply stated that they were going to send rebate checks to curry favor with voters, I'd roll my eyes and shrug my shoulders.&#13;<br /> &#13;<br /> But when they make Keynesian arguments to justify such a policy, I can't help but get upset about <a href="https://danieljmitchell.wordpress.com/2016/01/27/has-keynesian-economics-finally-jumped-the-shark/">the economic illiteracy</a>.&#13;<br /> &#13;<br /> Speaking of bad economic policy, GOPers also are pursuing bad spending policy.&#13;<br /> &#13;<br /><em>Politico</em> has <a href="http://www.politico.com/story/2017/08/09/white-house-border-wall-government-shutdown-241444">a report</a> on a potential budget deal where everyone wins...except taxpayers.&#13;<br /> &#13;</p> <blockquote><p>The White House is pushing a deal on Capitol Hill to head off a government shutdown that would lift strict spending caps long opposed by Democrats in exchange for money for President Donald Trump’s border wall with Mexico, multiple sources said.</p> </blockquote> <p>So much for <a href="https://danieljmitchell.wordpress.com/2017/05/26/a-simple-and-effective-strategy-for-trump-to-prevail-on-the-budget/">Trump's promise to get tough</a> on the budget, even if it meant a shutdown.&#13;<br /> &#13;<br /> Instead, the back-room negotiations are leading to more spending for all interest groups.&#13;<br /> &#13;</p> <blockquote><p>Marc Short, the White House’s director of legislative affairs, ...also lobbied for a big budget increase for the Pentagon, another priority for Trump. ...The White House is offering Democrats more funding for their own pet projects.</p> </blockquote> <p>The only good news is that Democrats are so upset about the symbolism of the fence that they may not go for the deal.&#13;<br /> &#13;</p> <blockquote><p>Democrats show no sign of yielding on the issue. They have already blocked the project once.</p> </blockquote> <p>Unfortunately, I expect this is just posturing. When the dust settles, I expect the desire for more spending (from both parties) will produce a deal that is bad news. At least for those of us who don't want America to become Greece (any faster than <a href="https://danieljmitchell.wordpress.com/2015/06/19/americas-greek-fiscal-future/">already scheduled</a>).&#13;<br /> &#13;</p> <blockquote><p>Republican and Democratic congressional aides have predicted for months that both sides will come together on a spending agreement to raise spending caps for the Pentagon as well as for nondefense domestic programs.</p> </blockquote> <p>So let's check our scorecard. On the tax side of the equation, we'll hopefully still get some good policy, such as a <a href="https://danieljmitchell.wordpress.com/2017/04/03/can-corporate-rate-reduction-save-the-tax-agenda/">lower corporate tax rate</a>, but it probably will be accompanied by some <a href="https://danieljmitchell.wordpress.com/2014/02/21/white-house-stimulus-report-based-on-keynesian-fairy-dust/">gimmicky Keynesian policy</a>.&#13;<br /> &#13;<br /> On the spending side of the equation, it appears <a href="https://danieljmitchell.wordpress.com/2016/12/29/trump-entitlements-and-americas-potential-greek-future/">my fears about Trump</a> may have been correct and he's going to be a <a href="https://danieljmitchell.wordpress.com/2016/08/01/setting-aside-crassness-and-bluster-trumps-a-typical-big-government-republican/">typical big-government Republican</a>.&#13;<br /> &#13;<br /> It's possible, of course, that I'm being needlessly pessimistic and we'll get the kinds of policies <a href="https://danieljmitchell.wordpress.com/2016/02/03/time-for-some-optimism-on-entitlement-reform/">I fantasized about</a> in early 2016. But I wouldn't bet money on a positive outcome.</p> Tue, 15 Aug 2017 14:40:35 -0400 Daniel J. Mitchell https://www.cato.org/blog/republicans-embrace-bad-economics-bad-policy The Real Victims of Class‐​Warfare Taxation https://www.cato.org/publications/commentary/real-victims-class-warfare-taxation Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Remember John Kerry, the former Secretary of State and Massachusetts Senator, the guy who routinely advocated higher taxes but then made sure to protect his own wealth? Not only did he protect much of his fortune in so‐​called tax havens, he even went through the trouble of domiciling his yacht outside of his home state to minimize his tax burden.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I did not object to Kerry’s tax avoidance, but I&nbsp;was irked by his hypocrisy. If taxes are supposed to be so wonderful, should not he have led by example?</p> <p>At the risk of understatement, folks on the left are not very good about practicing what they preach.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Over‐​taxing saving and investment can permanently lower a&nbsp;nation’s prosperity by reducing capital formation.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But let’s not dwell on John Kerry. Instead, let’s focus on other yacht owners so we can learn an important lesson about tax policy.</p> <p>And, as is so often the case, France is an example of the policies to avoid. As the Tom Sykes reports on The Daily Beast, “Talk to locals involved in the multibillion‐​euro yachting sector — and in the south of France that’s nearly everyone, in some trickle‐​down shape or form, as yachting is by some measures the biggest earner in the region after hotels and wine — and you detect a&nbsp;sinking feeling …. More and more yachting money is draining away … washing up in other European countries such as Spain, Italy, Greece, and Turkey.”</p> <p>Having once paid the equivalent of $11 for a&nbsp;diet Coke in Monaco, I&nbsp;can confirm that it is a&nbsp;painfully expensive region.</p> <p>But let’s focus on the more important issue: Why are the big yachts staying away from the French Riviera? Apparently they are avoiding France for the same reason that entrepreneurs are avoiding France. The tax burden is excessive.</p> <p>Here is Sykes again: “The core reason for the superyacht exodus is financial; France has tightened … tax regulations for the captains and crew members of yachts who officially reside in France, and often have families on the mainland, but traditionally have evaded all tax by claiming they were earning their salary offshore. The country has also taken a&nbsp;hard line on imposing 20 percent VAT on yacht fuel sales, which often used to be dodged. Given that a&nbsp;typical fill can be around €100,000, it is understandable that many captains are simply sailing around the corner.”</p> <p>I do not share this story because I&nbsp;feel sorry for wealthy people. Instead, the real lesson to be learned is that when politicians aim at the rich, it’s the rest of us that get victimized.</p> <p>Ordinary workers, whether at marinas or on board the yachts, are the ones who are losing out.</p> <p>Per Sykes: “Revenue at the iconic marina in Saint‐​Tropez has, according to a&nbsp;worried letter sent to President Emmanuel Macron by three of the Riviera’s most prominent politicians … fallen by 30 percent since the beginning of the year, while Toulon, a&nbsp;less glamorous destination, has suffered a&nbsp;40 percent decline …. They stated that refueling a&nbsp;42‐​meter yacht in Italy (instead of France) ‘gives a&nbsp;saving of nearly €21,000 a&nbsp;week because of the difference in tax.’ Sales by the four largest marine fuel vendors has fallen by 50 percent this summer, the letter said, adding that French “yachties” — an inexperienced 19‐​year‐​old deckhand makes around €2,000 per month and a&nbsp;good Captain can command €300,000 — were being laid off in droves, as, due to the new tax rules, national insurance, health and other compulsory contributions which boat owners pay for crew members have increased from 15 to 55 percent of their wages. The letter stated that ‘the additional cost of maintaining a&nbsp;seven‐​person crew in France is €300,000 (£268,000) a&nbsp;year.’”</p> <p>All of this is — or should have been — totally predictable. But let’s zoom out and make a&nbsp;broader point about public finance and tax policy.</p> <p>Harsh taxes on yachts backfire because the people being targeted have considerable ability to escape the tax by simply choosing to buy yachts, staff yachts, and sail yachts where taxes aren’t so onerous.</p> <p>Let’s now apply this insight to something far more important than yachts.</p> <p>Investment is a&nbsp;key for long‐​run growth and higher living standards. All economic theories — even Marxism and socialism — agree that capital formation is necessary to increase productivity and thus boost wages.</p> <p>Yet people do not have to save and invest. They can choose to immediately enjoy their earnings, especially if there are harsh taxes on income that is saved and invested.</p> <p>Or they can choose to (mis)allocate capital in ways that make sense from a&nbsp;tax perspective, but might not be very beneficial for the economy.</p> <p>And upper‐​income taxpayers have a&nbsp;lot of latitude over how much of their money is saved and invested, as well as how it is saved and invested. So when politicians impose high taxes on income that is saved and invested, they can expect big supply side responses, just as there are big responses when they impose punitive taxes on yachts.</p> <p>But here’s the bottom line. When they over‐​tax yachts, the damage is not that great. Yes, some local workers are out of jobs, but that tends to be offset by more job creation in other jurisdictions that now have more business from big boats.</p> <p>Over‐​taxing saving and investment, by contrast, can permanently lower a&nbsp;nation’s prosperity by reducing capital formation.</p> <p>And to the extent that this policy is imposed on the entire world (which is basically what the OECD is seeking), then there’s no additional growth in other jurisdictions to offset the suffering caused by bad tax policy in one jurisdiction.</p> </div> Wed, 09 Aug 2017 09:12:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/real-victims-class-warfare-taxation Tax Withholding Is Miracle‐​Grow for Government https://www.cato.org/publications/commentary/tax-withholding-miracle-grow-government Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>The internal revenue code is&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/12/16/the-case-against-the-irs-and-the-progressive-income-tax/" target="_blank">a&nbsp;reprehensible mess</a>&nbsp;that&nbsp;<a href="https://danieljmitchell.wordpress.com/2010/08/16/time-for-some-irs-bashing/" target="_blank">torments taxpayers</a>&nbsp;and undermines American competitiveness.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The good news is that Americans&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/04/18/some-good-news-on-tax-reform-if-you-prefer-the-flat-tax-over-the-national-sales-tax/" target="_blank">don’t like the tax system</a>.</p> <p>The bad news is that they don’t dislike it nearly as much as they should. At least in my humble opinion.</p> <p>There are two reasons for the inadequate level of disdain.</p> <ul><li>First, nearly half of all households are&nbsp;<a href="https://danieljmitchell.wordpress.com/2011/06/22/i-fantasize-about-a-world-with-no-income-tax-but/" target="_blank">no longer are subject to the income tax</a>. Indeed, the system is actually a&nbsp;revenue generator for some households since&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/10/16/the-eitc-washingtons-fastest-growing-form-of-income-redistribution/" target="_blank">the EITC wage subsidy</a>&nbsp;is a&nbsp;redistribution program laundered through the tax code.</li> <li>Second, many people get a&nbsp;warm and fuzzy feeling when they file their taxes because of the expectation that they will get a&nbsp;sizable refund, even though that payment from the IRS is simply a&nbsp;reflection of having paid too much tax during the prior year.</li> </ul><p>For those of us who want to&nbsp;<a href="https://danieljmitchell.wordpress.com/2012/08/11/a-primer-on-the-flat-tax-and-fundamental-tax-reform/" target="_blank">scrap the tax system</a>, this is a&nbsp;challenge.</p> <p>And I’m&nbsp;<a href="https://www.politicopro.com/labor-employment/story/2016/04/i-dont-know-what-the-headline-should-be-107950" target="_blank">not shy</a>&nbsp;about admitting the problem.</p> </div> , <blockquote class="blockquote"> <div> <p>About three‐​quarters typically get money back, with refunds so far this year averaging almost $3,000. For many, it will be the single biggest payment they receive all year. …the fact that so many people are getting paid by the IRS, and not the other way around, takes some of the edge off a&nbsp;day when they’re trying to stoke public anger at the tax system. “The fact that people are looking forward to tax time rubs me the wrong way,” said Dan Mitchell, a&nbsp;tax expert at the libertarian Cato Institute. “I would like them to be upset.”</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I also have a&nbsp;good idea of why the problem exists.</p> <p>It’s withholding. And it started back during World War II. Here’s some&nbsp;<a href="https://www.marketplace.org/2017/07/31/economy/how-tax-withholding-became-norm-american-workers" target="_blank">background</a>.</p> </div> , <blockquote class="blockquote"> <div> <p>During the war, tax rates went up, and a&nbsp;broader number of people were expected to pay them. Professor Anuj Desai from the University of Wisconsin Law School said there was a&nbsp;saying that income tax went from “a class tax to a&nbsp;mass tax.” …“The thought was that if we withhold a&nbsp;little bit every bit every paycheck, people won’t have to worry about the problem of coming up with a&nbsp;huge chunk of money,” Desai said. But withholding is also a&nbsp;remarkably efficient way for the government to raise money, and policymakers knew that. …“You could never have the taxes that were levied during World War II without withholding. It was absolutely essential for that purpose,” economist Milton Friedman said in an interview… Friedman worked with the Treasury Department at the time withholding was introduced. Withholding stuck around after the war, much to Friedman’s chagrin. “Unfortunately, once you got it installed, it’s almost impossible to get rid of it,” Friedman said. “It’s too useful to the people in power.”</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Jeffrey Tucker of the Foundation for Economic Education&nbsp;<a href="https://fee.org/articles/withheld-taxation-is-theft-even-if-it-doesn-t-feel-like-it/" target="_blank">elaborates</a>.</p> </div> , <blockquote class="blockquote"> <div> <p>The problem is…the withholding tax. Instead of being collected directly from the payer, the government collects them “at the source,” which is to say that they are collected from the institution that pays wages and salaries — on behalf of the taxpayer. …one of the most amazingly brilliant innovations of the modern state. This tinkering with the system — the creation of the institution called withholding — has created an illusion that paying taxes is really about getting free money! When the check arrives from the government a&nbsp;month or so later, the taxpayer is actually tempted to think: wow, this is really great! A&nbsp;pillaging has been spun to look like a&nbsp;gift. …Withholding dramatically changed the psychology of paying taxes. It almost feels like you aren’t paying any at all. The worker gets used to how much after‐​tax income she makes and adapts to it quickly. Then when tax time arrives, there is no more to pay. Instead you file and find yourself on the receiving end of what seems like an unexpected gift of a&nbsp;check from government. Yet in reality your refund is nothing more than the belated return of a&nbsp;zero‐​interest loan you were forced to provide the government.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Exactly.</p> <p>Every time I&nbsp;talk to somehow who is happy about a&nbsp;refund, I&nbsp;ask them whether they will give me an interest‐​free loan instead. After all, I’d be happy to collect money from them all year long and then return it the following April.</p> <p>But I’m digressing.</p> <p>Jeffrey points out how the political dynamics of tax day would change in the absence of withholding.</p> </div> , <blockquote class="blockquote"> <div> <p>If we really wanted to make a&nbsp;wonderful change in favor of transparency and decency, one that would mark a&nbsp;shift in people’s perceptions of the costs of government, the withholding tax could just be repealed completely. …every taxpayer would pay the full amount owed to the government every April 15 and otherwise receive full compensation the rest of the year. Such a&nbsp;seemingly small change would have a&nbsp;dramatic effect on public perceptions of taxation and government. Even from the age of 16, every citizen would have a&nbsp;more pungent reminder of the costs of government. We would no longer live the illusion that we can all get something for nothing and that government isn’t really expensive after all.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Ben Domenech of the Federalist&nbsp;<a href="http://thefederalist.com/2016/04/18/ban-tax-day/" target="_blank">agrees</a>.</p> </div> , <blockquote class="blockquote"> <div> <p>The overwhelming majority of Americans pay their taxes by having them extracted from their paychecks before they ever see the money. Operating under the fiction that the government is giving you money as opposed to returning what it has already taken is damaging to the psyche of the nation’s taxpayers. …Withholding was originally mandated as a&nbsp;wartime step, but its continuation since then disguises the property rights involved, essentially offers the government an interest free loan, and shields taxpayers from the ramifications of federal spending. The country would be better off if everyone experienced what entrepreneurs and business owners do: writing the most sizable checks every year to the government, and watching that hard‐​earned money walk out the door.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>By the way, this isn’t merely impractical libertarian fantasy.</p> <p>There’s a&nbsp;real‐​world example of a&nbsp;tax system where people actually write checks to the government and are much more aware of the cost of the public sector. It’s called Hong Kong, which is – not coincidentally – an&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/03/11/hong-kong-and-the-miracle-of-compounding-long-run-growth/" target="_blank">economic success story</a>&nbsp;in large part because of a&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/10/14/hong-kongs-remarkable-fiscal-policy/" target="_blank">good fiscal system</a>.</p> <p>And I&nbsp;would argue that good fiscal system exists because taxpayers are directly sensitive to the cost of government (it also helps that&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/05/28/proven-reforms-to-restrain-leviathan-government/" target="_blank">there’s a&nbsp;spending cap</a>&nbsp;in Hong Kong).</p> <p>Let’s close with some government propaganda. This Disney cartoon was produced before withholding. As you can see the government basically had to make the case that people should set aside money out of their paychecks so they would have enough money to make periodic tax payments.</p> <p>This was a&nbsp;plausible case when seeking to finance a&nbsp;war against National Socialism and Japanese imperialism. It wouldn’t be nearly as persuasive today when the government seems to specialize in financing&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/12/09/wasteful-spending-cost-overruns-and-the-never-ending-victimization-of-americas-taxpayers/" target="_blank">waste</a>,&nbsp;<a href="https://danieljmitchell.wordpress.com/2017/07/09/government-fraud-a-feature-not-a-bug/" target="_blank">fraud</a>, and&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/12/09/wasteful-spending-cost-overruns-and-the-never-ending-victimization-of-americas-taxpayers/" target="_blank">abuse</a>.</p> <p>P.S. At the bottom of&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/07/06/the-left-was-wrong-about-unemployment-insurance-plus-a-message-from-1948-about-markets-vs-statism/" target="_blank">this column</a>, you can watch a&nbsp;much better cartoon from the 1940s.</p> </div> Sat, 05 Aug 2017 09:03:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/tax-withholding-miracle-grow-government Daniel J. Mitchell discusses what the Russian Probe investigation means for the economy on FBN’s After the Bell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-what-russian-probe-investigation-means Thu, 03 Aug 2017 13:56:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-what-russian-probe-investigation-means Daniel J. Mitchell discusses President Trump taking credit for the stock market on Hearst TV https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-president-trump-taking-credit-stock Wed, 02 Aug 2017 11:25:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-president-trump-taking-credit-stock Daniel J. Mitchell discusses tax cuts and small businesses on The Blaze’s Dana https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-cuts-small-businesses-blazes-dana Mon, 24 Jul 2017 10:47:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-tax-cuts-small-businesses-blazes-dana United Kingdom Is Poised to Fall off the Wagon of Fiscal Sobriety https://www.cato.org/publications/commentary/united-kingdom-poised-fall-wagon-fiscal-sobriety Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>One of my favorite charts shows how nations achieve great results when they engage in multi‐​year periods of spending restraint. The most important benefit is that the burden of government shrinks relative to the private sector, but it’s also worth noting that the symptom of red ink begins to disappear when there is a&nbsp;serious effort to deal with the underlying disease of excessive spending.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But sharing this chart also a&nbsp;bittersweet experience since it shows — in almost all cases — that it is just a&nbsp;matter of time before politicians go back to fiscal profligacy.</p> <p>This is why I’m a&nbsp;huge fan of a&nbsp;permanent spending cap, ideally as part of a&nbsp;nation’s constitution.&nbsp;Jurisdictions that have adopted this approach, such as Hong Kong and Switzerland, have very strong long‐​run fiscal performance rather than just temporary blips of good policy.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Opening the spending spigot would be a&nbsp;terrible mistake. Especially to finance higher pay for bureaucrats.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>At the risk of understatement, it’s increasingly obvious that the United Kingdom needs this kind of permanent structural reform.</p> <p>I pulled together the data on government spending from the OECD, the IMF, and the UK government. They all have slightly different methodologies with slightly different numbers, but they all tell the same story.</p> <p>Ever since 2010, the burden of government spending has expanded by an average of about 1.6 percent annually. Spending is still growing, needless to say, but the private sector has been growing faster, so British policymakers have been satisfying my golden rule.</p> <p>And because the productive sector of the economy has grown faster than government, this means that relative burden of spending has declined.</p> <p>That’s the good news.</p> <p>The bad news is that politicians are tired of being responsible. They are salivating at the prospect of a&nbsp;new spending binge. Even Tory politicians now want to play Santa with other people’s money.</p> <p>Opening the spending spigot would be a&nbsp;terrible mistake. Especially to finance higher pay for bureaucrats. Even worse, they want to cancel tax cuts and/​or impose tax hikes to finance more money for the bureaucracy.</p> <p>You won’t be surprised to learn that British bureaucrats (just like their American cousins) are not underpaid compared to workers in the economy’s productive sector. As Tim Worstall, senior fellow at the Adam Smith Institute, explains, nor is bureaucracy suffering from a&nbsp;lack of compensation. He writes, “We’ve just had a&nbsp;massive recession and thus we are indeed worse off. That’s what a&nbsp;recession is all about. So the question should be: are we all sharing that pain? We are not. Public sector pay has fallen by less than private. The people paying the tax have suffered more than those who eat the tax — hardly a&nbsp;good argument in favour of tax‐​eater pay rises. …It is also true, as the IFS points out, that public sector pay rose substantially in the 2000 to 2005 period. Pay rose more and then pay fell less. I&nbsp;simply can’t see an argument for a&nbsp;public sector pay rise or the lifting of that cap here.”</p> <p>My colleague at the Cato Institute, Ryan Bourne, is a&nbsp;citizen of the United Kingdom, and he points out that one of the problems is that bureaucrat pay levels are determined nationally, which makes no sense when the cost of living varies widely across the country. He writes: “…they should phase out national pay bargaining where it remains in the public sector. Previous research by Allison Wolf has shown the high cost of having national pay scales and bargaining. …Poorer regions…suffer as very high pay relative to the private sector crowds out private sector growth.”</p> <p>Ryan explains that Sweden successfully adopted this reform: “There, collective bargaining was entirely replaced by individual contracts between staff and their local public sector employer, with little fuss. If applied here, managers would then have genuine flexibility in the creation of new posts. It would liberate them to set pay to reflect more accurately local conditions, while varying wages to fulfil difficult positions.”</p> <p>Of course, the ideal situation would be genuine federalism, with local communities raising their own funds and then deciding how lavishly to compensate the bureaucrats they hire. The U.K. actually took a&nbsp;baby step in that direction years ago by giving greater autonomy to Scotland.</p> <p>I’ll close with a&nbsp;rather depressing observation. It was only two months ago that I&nbsp;suggested Tories might be poised to make big policy improvements in the United Kingdom. Now it appears that they’ll be competing with the Labour Party on how to spend other people’s money.</p> <p>The great Margaret Thatcher is probably spinning in her grave.</p> </div> Mon, 17 Jul 2017 10:39:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/united-kingdom-poised-fall-wagon-fiscal-sobriety This State Is Moving Another Step Closer to Bankruptcy https://www.cato.org/publications/commentary/state-moving-another-step-closer-bankruptcy Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Here’s what&nbsp;<a href="https://danieljmitchell.wordpress.com/2017/06/03/illinois-on-the-brink-of-fiscal-meltdown/" target="_blank">I&nbsp;wrote last month</a>&nbsp;about the fiscal situation in Illinois.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> </div> , <blockquote class="blockquote"> <div> <p>Illinois&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/12/23/the-illinois-death-spiral/" target="_blank">is a&nbsp;mess</a>. Taxes and spending&nbsp;<a href="https://danieljmitchell.wordpress.com/2012/01/27/since-obamas-class-warfare-tax-policy-is-failing-in-illinois-why-does-he-think-it-will-work-for-the-entire-country/" target="_blank">already are too high</a>, and&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/10/17/pension-promises-to-state-and-local-bureaucrats-are-a-ticking-time-bomb/" target="_blank">huge unfunded liabilities</a>&nbsp;point to an even darker future. Simply stated, politicians and government employee unions have created an unholy alliance to extract as much money as possible from the state’s beleaguered private sector. That’s not a&nbsp;surprise. Indeed, it’s easily explained by the “<a href="https://danieljmitchell.wordpress.com/2017/01/16/tax-competition-a-necessary-liberalizing-process-to-discipline-the-stationary-bandit-of-government/" target="_blank">stationary bandit</a>” theory of government. But while the bandit of government may be stationary, the&nbsp;<a href="https://danieljmitchell.wordpress.com/2011/01/11/animal-house-john-galt-the-laffer-curve-and-the-race-to-commit-fiscal-suicide-in-illinois/" target="_blank">victims are not</a>. At least not in a&nbsp;nation with 50 different states.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Looking at this grim situation, the state legislature decided it had to act.</p> <p><strong>Full‐​Speed Ahead</strong></p> <p>Unfortunately, the politicians in Springfield decided that action meant stepping on the accelerator while&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/09/05/from-new-hampshire-at-the-top-to-new-york-at-the-bottom-ranking-freedom-at-the-state-level/" target="_blank">driving in the wrong direction</a>. Democrats in the state legislature (joined by some big‐​government Republicans, just&nbsp;<a href="https://danieljmitchell.wordpress.com/2017/06/21/three-lessons-from-the-tax-defeat-in-kansas/" target="_blank">like in Kansas</a>) just overrode Governor Rauner’s veto and imposed a&nbsp;huge tax hike on a&nbsp;state that&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/07/09/state-fiscal-rankings-and-implications-for-public-policy-and-the-2016-presidential-race/" target="_blank">already has one of the nation’s highest tax burdens</a>.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>In the case of Illinois, it’s almost as if the state exists to enrich a&nbsp;cosseted class of state and local bureaucrats.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>This will <a href="https://danieljmitchell.wordpress.com/2017/03/07/a-tax-hike-in-illinois-will-hasten-the-states-fiscal-collapse/" target="_blank">hasten the state's collapse</a>.</p> <p><a href="https://www.youtube.com/watch?v=zRjvMDvFhlk" target="_blank">Here's</a> what I said earlier this week about the prospect of another tax hike in the state.</p> <p>I specifically want to highlight something I said about halfway through the interview about the burden of government spending in Illinois compared to regional competitors.</p> <p>Here's a chart I prepared based <a href="http://www.usgovernmentspending.com/compare_state_spending_2017dF0a" target="_blank">on data</a> culled from the Census Bureau. As you can see, per-capita outlays are higher in Illinois than in neighboring states. In some cases, thousands of dollars higher.</p> <p class="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="2e00e608-9ee0-4c3f-a8d0-e6421aa17991" data-langcode="en" class="embedded-entity"> <img width="637" height="394" alt="Media Name: heresachart.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/heresachart.jpg?itok=gUif4P4M 1x, /sites/cato.org/files/styles/pubs_2x/public/heresachart.jpg?itok=9ZlJ-Aeo 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/heresachart.jpg?itok=gUif4P4M" typeof="Image" /></div> <p>Given this data, I'd like to ask the people of Illinois the same question <a href="https://danieljmitchell.wordpress.com/2013/06/18/whats-the-better-role-model-france-or-switzerland/" target="_blank">I asked an audience in Paris</a> when comparing France and Switzerland. What exactly are you getting for all that money?</p> <p>The answer is nothing. Just like the French governments spends far more than the Swiss government without delivering better services, the Illinois government spends far more than the Indiana government without delivering better services.</p> <p>Instead, the money gets diverted to the pockets of the various interest groups. In the case of Illinois, it's almost as if the state exists to enrich a cosseted class of state and local bureaucrats.</p> <p><strong>Flee The State</strong></p> <p>The <em>Wall Street Journal</em>'s <a href="https://www.wsj.com/articles/blue-state-budget-breakdowns-1499198223" target="_blank">editorial</a> earlier this week made several key points.</p> </div> , <blockquote class="blockquote"> <div> <p>In Illinois, Democrats spent the long weekend coaxing Republican legislators to join their suicide pact to raise taxes to plug a $6 billion deficit… And don’t forget the $130 billion unfunded pension liability&nbsp;none of which will be solved by the $5 billion tax hike. …The state legislature is controlled by public unions that refuse to compromise. …Pensions will consume about a&nbsp;quarter of Illinois’s general fund this year. Nearly 40% of state education dollars go toward teacher pensions, and the state paid nearly as much into the State Universities Retirement System last year as it spent on higher education. Anemic revenue and economic growth can’t keep up with entitlement spending. The state’s GDP has ticked up by a&nbsp;mere 0.8% annually over the last four years compared to 2% nationwide and 1.4% in the Great Lakes region. Since 2010 more than 520,000 Illinois residents on net have fled to other states.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>And Jonathan Williams of the American Legislative Exchange Council also opined on the mess in Illinois.</p> </div> , <blockquote class="blockquote"> <div> <p>…the focus should be on fixing the state’s big‐​government policy prescriptions that are killing economic growth and opportunity. It should come as no surprise that businesses and citizens continue to leave the Land of Lincoln in droves. The credit rating agencies are right to question Illinois’ ability to pay its bills, as the tax base flees to other states.</p> <p>…When the rosy accounting assumptions are stripped away, Illinois has a&nbsp;dismal 23.77 percent funding ratio, $362.6 billion in total amount of unfunded liabilities. That staggering number represents an unfunded pension liability of $28,200 for every man, woman and child in Illinois. …one might assume the state government is not bringing in enough revenue and merely needs to raise taxes. This is simply false. According to Tax Foundation’s analysis, Illinois’ taxpayers pay the 5th highest combined state‐​local tax burden in America.</p> <p>…It should come as no surprise, then, that nearly 700,000 Illinois residents left from 2006–2015… Only New York and California experienced higher levels of domestic out‐​migration during the same period.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The bottom line is that this latest tax hike will cause more productive people to leave the state. Politicians in the state also will have an excuse to postpone much‐​needed reforms of the state pension system, which is the primary threat to long‐​run solvency. And government, which already is too big, will become&nbsp;<a href="https://danieljmitchell.wordpress.com/2012/01/21/illinois-leftist-does-a-facepalm-confirming-that-higher-taxes-enable-higher-spending-while-trying-to-make-the-opposite-point/" target="_blank">an even bigger burden</a>.</p> <p>P.S. At some point, I&nbsp;need to write about Indiana, a&nbsp;state that&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/10/07/advice-for-taxpayers-if-you-cant-move-to-hong-kong-or-the-cayman-islands-move-to-florida-or-indiana/" target="_blank">quietly has amassed</a>&nbsp;a&nbsp;very good track record of fiscal prudence. Especially since it’s about to benefit from an&nbsp;<a href="https://danieljmitchell.wordpress.com/2013/08/24/why-tax-migration-and-federalism-mean-doom-for-left-wing-states-such-as-new-york-california-and-illinois/" target="_blank">influx of tax refugees</a>&nbsp;from its neighbor to the west.</p> </div> Mon, 17 Jul 2017 09:29:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/state-moving-another-step-closer-bankruptcy The Recipe for Singapore’s Prosperity https://www.cato.org/publications/commentary/recipe-singapores-prosperity Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Singapore is one of my favorite nations for the simple reason that it consistently gets very high scores from&nbsp;<a href="https://danieljmitchell.wordpress.com/2011/09/20/new-rankings-from-economic-freedom-of-the-world-reveal-dismal-impact-of-bush-obama-statism/" target="_blank"><em>Economic Freedom of the World</em></a>&nbsp;and the&nbsp;<em><a href="https://danieljmitchell.wordpress.com/2017/02/15/americas-diminishing-economic-liberty/" target="_blank">Index of Economic Freedom</a></em>&nbsp;(as well as from&nbsp;<em><a href="https://danieljmitchell.wordpress.com/2016/10/27/new-zealand-and-singapore-get-best-scores-america-drops-to-8-in-2016-doing-business-rankings/" target="_blank">Doing Business</a></em>,&nbsp;<em><a href="https://danieljmitchell.wordpress.com/2016/10/10/the-united-states-has-the-third-most-competitive-economy-but-could-be-1-if-government-was-smaller-and-less-expensive/" target="_blank">Global Competitiveness Report</a></em>, and&nbsp;<em><a href="https://danieljmitchell.wordpress.com/2016/06/06/national-competitiveness-and-economic-freedom/" target="_blank">World Competitiveness Yearbook</a></em>).</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p class="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="7e1f3e04-1e1a-490c-acff-6df071c9cd2c" data-langcode="en" class="embedded-entity"> <img width="665" height="381" alt="Media Name: singapo-mitchll.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/singapo-mitchll.jpg?itok=sGpXLP5h 1x, /sites/cato.org/files/styles/pubs_2x/public/singapo-mitchll.jpg?itok=DRhHoxh8 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/singapo-mitchll.jpg?itok=sGpXLP5h" typeof="Image" /></div> <p>I also greatly admire Singapore’s <a href="https://danieljmitchell.wordpress.com/2014/11/27/singapore-a-remarkable-free-market-success-story/" target="_blank">strict adherence to my Golden Rule</a> for a 10-year period beginning in the late 1990s. Government spending actually shrank by a bit more than 1 percent per year, on average, over that decade.</p> <p>This reduced the burden of government spending to just 12 percent of economic output, almost as low <a href="https://danieljmitchell.wordpress.com/2012/07/14/why-western-europe-became-rich-in-the-past-and-how-it-can-regain-prosperity-today/" target="_blank">as it was in North America and Western Europe</a> in the 1800s.</p> <p>Unfortunately, the public sector has since crept back up to 20 percent of GDP, but that’s still very low compared to the rest of the developed world.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>As I&nbsp;repeatedly argue, if you want good economic results, you need good policy.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>What’s especially attractive is that the welfare state is very small in Singapore. According to the IMF (see <a href="https://www.imf.org/en/Publications/CR/Issues/2016/12/31/Singapore-2016-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-44154" target="_blank">page 44</a>), expenditures on “social development” are only about 8 percent of GDP, and that category includes education and health care. If you peruse <a href="http://www.singaporebudget.gov.sg/data/budget_2017/download/05%20Government%20Expenditure%202017.pdf" target="_blank">Singapore budget documents</a>, spending on “transfers” is well under 5 percent of economic output.</p> <p>Either figure is far below <a href="http://www.singaporebudget.gov.sg/data/budget_2017/download/05%20Government%20Expenditure%202017.pdf" target="_blank">levels of redistribution</a> in other developed nations.</p> <p>One of the reasons the welfare state is so small is that individuals are required to set aside their own money for health and retirement.</p> <p>And since the burden of spending is modest, that enables Singapore to have <a href="https://www.iras.gov.sg/IRASHome/About-Us/Taxes-in-Singapore/The-Singapore-Tax-System/" target="_blank">a non-oppressive tax regime</a>.</p> <ul><li>A top personal income tax rate of 22 percent (about half the U.S. level)</li> <li>A corporate tax rate of 17 percent (less than half <a href="https://danieljmitchell.wordpress.com/2012/04/02/with-washington-now-imposing-the-worlds-highest-corporate-tax-rate-every-day-is-april-fools-day-for-american-companies/" target="_blank">the U.S. level</a>).</li> <li>No death tax (unlike <a href="https://danieljmitchell.wordpress.com/2012/07/29/on-death-tax-the-u-s-is-worse-than-greece-worse-than-france-and-even-worse-than-venezuela/" target="_blank">most other developed nations</a>).</li> <li>No capital gains tax (unlike <a href="https://danieljmitchell.wordpress.com/2014/11/02/the-overwhelming-case-against-capital-gains-taxation/" target="_blank">most other developed nations</a>).</li> <li>Very little double-taxation of interest and dividends (unlike <a href="https://danieljmitchell.wordpress.com/2013/12/09/massive-double-taxation-is-a-self-inflicted-tax-injury-that-undermines-american-competitiveness-and-job-creation/" target="_blank">most other developed nations</a>).</li> </ul><p>That’s the good news. The bad news is that <a href="https://danieljmitchell.wordpress.com/2009/10/14/a-vat-would-finance-the-road-to-serfdom/" target="_blank">a value-added tax</a> was imposed back in the 1990s. Though the rate has stayed low (so far) and hasn’t (yet) become a money machine for big government.</p> <p>Singapore is also very good in areas other than fiscal policy. It is a shining example of the benefits of open trade. It <a href="https://danieljmitchell.wordpress.com/2016/10/20/as-confirmed-by-new-global-rankings-rule-of-law-is-why-western-civilization-is-superior/" target="_blank">ranks very highly</a> for rule of law. And there’s very little regulation.</p> <p>Indeed, Singapore has consistently ranked #2 for economic freedom in recent decades, trailing only Hong Kong (the U.S. briefly edged out Singapore for second place after all the market-friendly reforms of the <a href="https://danieljmitchell.wordpress.com/2016/05/12/was-reaganomics-a-success/" target="_blank">Reagan</a> and <a href="https://danieljmitchell.wordpress.com/2016/01/09/bill-clinton-vs-barack-obama/" target="_blank">Clinton</a> years, but now we trail by a wide margin thanks to the <a href="https://danieljmitchell.wordpress.com/2011/09/20/new-rankings-from-economic-freedom-of-the-world-reveal-dismal-impact-of-bush-obama-statism/" target="_blank">statism of the Bush-Obama years</a>).</p> <p>Here’s <a href="https://www.fraserinstitute.org/economic-freedom/graph?countries=SGP&amp;page=graph&amp;area1=1&amp;area2=1&amp;area3=1&amp;area4=1&amp;area5=1&amp;type=line&amp;min-year=1970&amp;max-year=2014" target="_blank">a graph</a> from <em>Economic Freedom of the World</em> showing how Singapore started at a decent point in 1970 and then had a 20-year period of improvement (most because of deregulation and better monetary policy).</p> <p>As I <a href="https://danieljmitchell.wordpress.com/2015/03/29/if-poor-nations-want-economic-convergence-and-capital-accumulation-they-need-good-policy/" target="_blank">repeatedly argue</a>, if you want good economic results, you need good policy.</p> <p class="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="637ea7c1-2dd7-4315-a79d-8bc354a6e1d7" data-langcode="en" class="embedded-entity"> <img width="700" height="240" alt="Media Name: lonmg-grab.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/lonmg-grab.jpg?itok=cWA-BbhB 1x, /sites/cato.org/files/styles/pubs_2x/public/lonmg-grab.jpg?itok=5NtO5zUJ 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/lonmg-grab.jpg?itok=cWA-BbhB" typeof="Image" /></div> <p>And that's exactly the story of Singapore.</p> <p>I'm currently in the country because I spoke earlier today at a conference on global investment (the audience got quite excited when I explained the <a href="https://danieljmitchell.wordpress.com/2017/06/26/whether-for-reasons-of-good-policy-or-personal-revenge-trump-and-republicans-should-end-subsidies-for-the-oecd/" target="_blank">effort to defund the OECD</a>).</p> <p>Walking the streets, it's hard not to be impressed by the widespread prosperity of the jurisdiction. Sleek buildings. Fancy shops. Lots of professionals.</p> <p>And ordinary people are the biggest winners. Here's a remarkable chart from <em><a href="http://humanprogress.org/f1/2249" target="_blank">Human Progress</a></em> showing per capita GDP (in $2015 inflation-adjusted dollars) in Singapore and the United States, along with the world average.</p> <p>As you can see, Singapore used to be far below the United States and somewhat below the world average. Now it is one of the wealthiest places on the planet.</p> <p class="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="d5fd770c-3a77-4e30-a448-abbad0fe0582" data-langcode="en" class="embedded-entity"> <img width="700" height="407" alt="Media Name: secondgraph-mitchell.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/secondgraph-mitchell.jpg?itok=dmIP_XDP 1x, /sites/cato.org/files/styles/pubs_2x/public/secondgraph-mitchell.jpg?itok=S8o8w4YO 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/secondgraph-mitchell.jpg?itok=dmIP_XDP" typeof="Image" /></div> <p>Singapore’s jump from poverty to prosperity is astounding.</p> <p>What’s really remarkable is that the country was <a href="https://danieljmitchell.wordpress.com/2014/04/29/a-case-study-of-why-growth-trumps-inequality/" target="_blank">as poor as Jamaica</a> back in the 1960s. But thanks to rapid economic growth, the people of Singapore enjoy very high living standards today.</p> <p>The moral of the story is that ordinary people in Singapore enjoy prosperity because the government was smart enough to focus on growth and didn’t worry about inequality.</p> <p>Here’s what Marian Tupy, one of my colleagues at the Cato Institute, <a href="http://humanprogress.org/blog/singapore-power-economic-freedom" target="_blank">wrote</a> about the country’s incredible growth.</p> </div> , <blockquote class="blockquote"> <div> <p>The incredible transformation of Singapore from a&nbsp;sleepy outpost of the British Empire to a&nbsp;global commercial and technological hub was partly facilitated by a&nbsp;very high degree of economic freedom. …As late as 1970, per person income in Singapore was 54 percent of the global average. Today it is 321 percent of the global average.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Now for the bad news.</p> <p>Singapore is very pro‐​market, but it’s not very pro‐​liberty. In&nbsp;<a href="https://fee.org/articles/is-singapore-a-libertarian-paradise/" target="_blank">an article</a>&nbsp;for the Foundation for Economic Education, Donovan Choy highlights some of the nation’s shortcomings.</p> </div> , <blockquote class="blockquote"> <div> <p>Within libertarian circles, Singapore generally enjoys a&nbsp;good reputation for its economic freedom.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But it’s not Nirvana.</p> </div> , <blockquote class="blockquote"> <div> <p>The Housing Development Board (HDB), the public housing arm of the state, houses more than 80% of the population in high‐​rise apartment homes. …Education is largely monopolized by the state from the primary school level up until the university level… Singapore suffers from a&nbsp;severe lack of press freedom, ranking at an alarming 151&nbsp;in the World Press Freedom Index… The state also controls public broadcasting from television to radio. …Singapore is perhaps most well‐​known for its non‐​tolerance of drugs. Drug users can be jailed or housed in rehabilitation centers for up to three years and drug traffickers face the death penalty. …Singaporean males are also subject to mandatory conscription of up to two years by the age of 18, a&nbsp;law that has been in effect since 1967. Civil ownership of guns are outlawed in Singapore.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>These are reasons why Singapore does not earn a&nbsp;high score in the&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/12/01/mirror-mirror-on-the-wall-which-nation-has-the-most-total-freedom-of-all/" target="_blank">Human Freedom Index</a>.</p> <p>But I’m an economist, so I’m still as positively impressed as I&nbsp;was&nbsp;<a href="https://danieljmitchell.wordpress.com/2009/10/17/thoughts-about-singapore/" target="_blank">back in 2009</a>.</p> <p>P.S. I&nbsp;went to the iconic&nbsp;<a href="https://en.wikipedia.org/wiki/Raffles_Hotel" target="_blank">Raffles Hotel</a>&nbsp;to visit the iconic&nbsp;<a href="https://www.worldsbestbars.com/bar/singapore/city-center/long-bar" target="_blank">Long Bar</a>&nbsp;and drink an iconic&nbsp;<a href="https://en.wikipedia.org/wiki/Singapore_Sling" target="_blank">Singapore Sling</a>. But my attempt to be&nbsp;<a href="https://www.travelfish.org/eatandmeet_profile/singapore/central_region/central_area/downtown_singapore/2254" target="_blank">a&nbsp;stereotypical tourist</a>&nbsp;was derailed because that part of the hotel is being renovated. Which is probably a&nbsp;good outcome since I&nbsp;learned that the Singapore Sling is a&nbsp;gin‐​based drink, which presumably would not agree with my sensitive palate. Though I&nbsp;did learn that the last wild tiger in Singapore was&nbsp;<a href="http://freedomandprosperity.org/wp-content/uploads/2017/06/Singapore-Raffles-Tiger.jpg" target="_blank">killed at the hotel</a>&nbsp;back in 1902.</p> <p>P.P.S. One final policy comment: The bureaucrats at the OECD produced a&nbsp;report on Asian economies and argued that taxes should consume at least 25 percent of GDP to achieve prosperity, which was a&nbsp;remarkable assertion since&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/12/04/oecd-overlooks-amazing-success-of-low-tax-singapore-urges-higher-taxes-in-asia/" target="_blank">the report showed</a>&nbsp;that Singapore was the richest nation in the region and has a&nbsp;tax burden barely half that level. That’s an example of what soccer fans call an “<a href="https://www.youtube.com/watch?v=WFUxA4I1tno" target="_blank">own goal</a>.” The OECD wasn’t just being statist, it was being incompetently statist.</p> </div> Mon, 17 Jul 2017 09:22:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/recipe-singapores-prosperity The International Monetary Fund Accidentally Provides Strong Evidence for the Laffer Curve https://www.cato.org/blog/international-monetary-fund-accidentally-provides-strong-evidence-laffer-curve Daniel J. Mitchell <p>As a general rule, the International Monetary Fund is <a href="https://danieljmitchell.wordpress.com/2017/06/13/more-economic-malpractice-at-the-imf/">a statist organization</a>. Which shouldn't be too surprising since its key "shareholders" are the world's major governments.&#13;<br /> &#13;<br /><a href="https://danieljmitchell.wordpress.com/2016/08/10/a-cartoon-that-tells-you-everything-you-need-to-know-about-international-bureaucracies/"><br /><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="b5f0f673-3b36-4467-be26-846f535c240c" class="align-right embedded-entity" data-langcode="und"> <img srcset="/sites/cato.org/files/styles/pubs/public/download-remote-images/freedomandprosperity.org/79513780224/Cartoon1.jpg?itok=et5eukc_ 1x, /sites/cato.org/files/styles/pubs_2x/public/download-remote-images/freedomandprosperity.org/79513780224/Cartoon1.jpg?itok=UtWO2YP5 1.5x" width="700" height="572" src="/sites/cato.org/files/styles/pubs/public/download-remote-images/freedomandprosperity.org/79513780224/Cartoon1.jpg?itok=et5eukc_" alt="Media Name: Cartoon1.jpg" typeof="Image" class="component-image" /></div> </a></p> <p>And when you realize who controls the purse strings, it's no surprise to learn that the bureaucracy is a persistent <a href="https://danieljmitchell.wordpress.com/2014/08/05/the-imfs-continuous-and-destructive-love-affair-with-higher-taxes/">advocate of higher tax burdens</a> and <a href="https://danieljmitchell.wordpress.com/2015/06/21/regarding-research-on-inequality-aei-imf/">bigger government</a>. Especially when the IMF's politicized and leftist (and <a href="https://danieljmitchell.wordpress.com/2012/05/31/the-steroid-pumped-version-of-taxes-are-for-the-little-people/">tax-free</a>) leadership <a href="https://danieljmitchell.wordpress.com/2016/05/29/more-hack-analysis-from-the-imf/">dictates the organization's agenda</a>.&#13;<br /> &#13;<br /> Which explains why I've referred to that bureaucracy as a "<a href="https://danieljmitchell.wordpress.com/2016/02/29/the-imf-is-the-dumpster-fire-of-the-global-economy/">dumpster fire of the global economy</a>" and the "<a href="https://danieljmitchell.wordpress.com/2013/05/23/the-imf-is-the-doctor-kevorkian-of-global-economic-policy/">Dr. Kevorkian of global economic policy</a>."&#13;<br /> &#13;<br /> I always make sure to point out, however, that there are some decent economists who work for the IMF and that they occasionally are allowed to produce good research. I've <a href="https://danieljmitchell.wordpress.com/2015/03/16/to-control-leviathan-even-the-imf-agrees-that-spending-caps-are-far-more-effective-than-balanced-budget-requirements/">favorably cited</a> the bureaucracy's <a href="https://danieljmitchell.wordpress.com/2015/05/25/balanced-budget-requirements-dont-work-as-well-as-spending-limits/">work on spending caps</a>, for instance.&#13;<br /> &#13;<br /> But what amuses me is when the IMF tries to promote bad policy and accidentally gives me powerful evidence for good policy. That happened in 2012, for example, when it <a href="https://danieljmitchell.wordpress.com/2012/11/01/new-international-monetary-fund-study-inadvertently-provides-very-strong-evidence-against-the-value-added-tax-2/">produced some very persuasive data</a> showing that value-added taxes are <a href="https://danieljmitchell.wordpress.com/2015/11/21/the-value-added-tax-a-nixonian-scheme-to-fund-bigger-government/">money machines to finance a bigger burden of government</a>.&#13;<br /> &#13;<br /> Well, it's happened again, though this time the bureaucrats inadvertently just issued some research that makes the case for the <a href="https://danieljmitchell.wordpress.com/2011/03/03/a-laffer-curve-tutorial/">Laffer Curve</a> and <a href="https://danieljmitchell.wordpress.com/2017/03/09/global-evidence-shows-lower-corporate-tax-rates-are-a-no-lose-recipe-for-growth-and-competitiveness/">lower corporate tax rates</a>.</p> <p>Though I can assure you that wasn't the intention. Indeed, the <a href="https://blogs.imf.org/2017/07/11/peer-pressure-tax-competition-and-developing-economies/">article</a> was written as part of the IMF's battle against tax competition. As you can see from these excerpts, the authors clearly seem to favor higher tax burdens on business and want to cartelize the global economy for the benefit of the political class.&#13;<br /> &#13;</p> <blockquote><p>...what’s the problem when it comes to governments competing to attract investors through the tax treatment they provide? The trouble is...competing with one another and eroding each other’s revenues...countries end up having to...reduce much-needed public spending... All this has serious implications for developing countries because they are especially reliant on the corporate income tax for revenues. The risk that tax competition will pressure them into tax policies that endanger this key revenue source is therefore particularly worrisome. ...international mobility means that activities are much more responsive to taxation from a national perspective... This is especially true of the activities and incomes of multinationals. Multinationals can manipulate transfer prices and use other avoidance devices to shift their profits from high tax countries to low, and they can choose in which country to invest. But they can’t shift their profits, or their real investments, to another planet. When countries compete for corporate tax base and/or real investments they do so at the expense of others—who are doing the same.</p> </blockquote> <p>Here's the data that most concerns the bureaucrats, though they presumably meant to point out that corporate tax rates have fallen by 20 percentage points, not by 20 percent.&#13;<br /> &#13;</p> <blockquote><p>Headline corporate income tax rates have plummeted since 1980, by an average of almost 20 percent. ...it is a telling sign of international tax competition at work, which closer empirical work tends to confirm.</p> </blockquote> <p>But here's the accidental admission that immediately caught my eye. The authors admit that lower corporate tax rates have not resulted in lower revenue.&#13;<br /> &#13;</p> <blockquote><p>...revenues have remained steady so far in developing countries and increased in advanced economies.</p> </blockquote> <p>And this wasn't a typo or sloppy writing. Here are two charts that were included with the article. The first one shows that revenues (the red line) have climbed in the industrialized world as the average corporate tax rate (the blue line) has plummeted.&#13;<br /> &#13;<br /><a href="https://blogs.imf.org/wp-content/uploads/2017/07/Tax-rates-tumble.jpg"><br /><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="a336f8b0-290e-4ec0-bdb3-aa12d5bd989d" data-langcode="und" class="embedded-entity"> <img srcset="/sites/cato.org/files/styles/pubs/public/download-remote-images/blogs.imf.org/280064514457/Tax-rates-tumble.jpg?itok=g06rNAPS 1x, /sites/cato.org/files/styles/pubs_2x/public/download-remote-images/blogs.imf.org/280064514457/Tax-rates-tumble.jpg?itok=e7bU5RfV 1.5x" width="476" height="768" src="/sites/cato.org/files/styles/pubs/public/download-remote-images/blogs.imf.org/280064514457/Tax-rates-tumble.jpg?itok=g06rNAPS" alt="Media Name: Tax-rates-tumble.jpg" typeof="Image" class="component-image" /></div> </a></p> <p>&#13;<br /> &#13;<br /> This may not be as dramatic as <a href="https://danieljmitchell.wordpress.com/2011/11/06/a-lesson-on-the-laffer-curve-for-barack-obama/">what happened</a> when Reagan reduced tax rates on investors, entrepreneurs, and other upper-income taxpayers in the 1980, but it's still a very dramatic and powerful example of the Laffer Curve in action.&#13;<br /> &#13;<br /> And even in the developing world, we see that revenues (red line) have stayed stable in spite of - or perhaps because of - huge reductions in average corporate tax rates (blue line).&#13;<br /> &#13;<br /><a href="https://blogs.imf.org/wp-content/uploads/2017/07/ENG_Jul_7_International_taxation_2.jpg"><br /><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="3b5fe1d5-25c6-4528-88d7-fee8eec536d4" data-langcode="und" class="embedded-entity"> <img srcset="/sites/cato.org/files/styles/pubs/public/download-remote-images/blogs.imf.org/280064514457/ENG_Jul_7_International_taxation_2.jpg?itok=XrdJOUvo 1x, /sites/cato.org/files/styles/pubs_2x/public/download-remote-images/blogs.imf.org/280064514457/ENG_Jul_7_International_taxation_2.jpg?itok=zHt2btCy 1.5x" width="550" height="910" src="/sites/cato.org/files/styles/pubs/public/download-remote-images/blogs.imf.org/280064514457/ENG_Jul_7_International_taxation_2.jpg?itok=XrdJOUvo" alt="Media Name: ENG_Jul_7_International_taxation_2.jpg" typeof="Image" class="component-image" /></div> </a></p> <p>&#13;<br /> &#13;<br /> These findings are not very surprising for those of us who have <a href="https://danieljmitchell.wordpress.com/2013/03/17/if-obama-wants-more-tax-revenue-he-should-lower-the-corporate-tax-rate/">been arguing in favor of lower corporate tax rates</a>.&#13;<br /> &#13;<br /> But it's astounding that the IMF published this data, especially as part of an article that is trying to promote higher tax burdens.&#13;<br /> &#13;<br /> It's as if a prosecutor in a major trial says a defendant is guilty and then spends most of the trial producing exculpatory evidence.&#13;<br /> &#13;<br /> I have no idea how this managed to make its way through the editing process at the IMF. Wasn't there an intern involved in the proofreading process, someone who could have warned, "Umm, guys, you're actually giving Dan Mitchell some powerful data in favor of lower tax burdens"?&#13;<br /> &#13;<br /> In any event, I look forward to repeatedly writing "even the IMF agrees" when pontificating in the future about <a href="https://danieljmitchell.wordpress.com/2014/06/11/more-evidence-for-the-laffer-curve-and-lower-corporate-tax-rates/">the Laffer Curve and the benefits of lower corporate tax rates</a>.</p> Fri, 14 Jul 2017 11:25:00 -0400 Daniel J. Mitchell https://www.cato.org/blog/international-monetary-fund-accidentally-provides-strong-evidence-laffer-curve This Is What Happens When You Ask Pro‐​Taxers to Pay More https://www.cato.org/publications/commentary/what-happens-when-you-ask-pro-taxers-pay-more Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>If you want to see a&nbsp;bunch of hypocritical leftists squirming with embarrassment, there’s&nbsp;<a href="https://danieljmitchell.wordpress.com/2011/12/26/rich-statists-exposed-as-complete-hypocrites/" target="_blank">a&nbsp;very clever video</a>&nbsp;showing what happens when a&nbsp;bunch of pro‐​tax hike millionaires are asked to voluntarily pay more money to the IRS.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>I think people who deliberately over‐​pay to government are very misguided, but it’s better to be naive than to be hypocritical.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I’ve even&nbsp;<a href="https://danieljmitchell.wordpress.com/2009/07/22/debating-a-guilt-ridden-rich-guy/" target="_blank">debated some of these rich, pro‐​tax statists on TV</a>, telling them not to&nbsp;<a href="https://danieljmitchell.wordpress.com/2010/04/10/debating-another-neurotic-silver-spoon-leftist/" target="_blank">make the rest of us victims of their neurotic guilt feelings</a>.</p> <p>They definitely don’t put their money where their mouths are. There is&nbsp;<a href="https://www.pay.gov/public/form/entry/101/" target="_blank">an official government webpage</a>where people can voluntary send extra cash to Washington, but the&nbsp;<a href="https://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm" target="_blank">amount of money raised</a>&nbsp;doesn’t even qualify as an asterisk in the federal budget.</p> <p>You probably won’t be surprised to learn that people elsewhere in the world also are not keen on the idea of deliberately giving politicians extra money to spend.</p> <p><strong>Voluntary Taxation</strong></p> <p>Bloomberg has a&nbsp;<a href="https://www.bloomberg.com/news/articles/2017-07-06/-voluntary-tax-plan-as-expected-fails-miserably-in-norway" target="_blank">rather amusing story</a>&nbsp;about the utter failure of a&nbsp;voluntary tax in Norway.</p> </div> , <blockquote class="blockquote"> <div> <p>Eager to pay more taxes? Then look no further than Norway. …Launched in June, the initiative has received a&nbsp;lukewarm reception, with the equivalent of just $1,325&nbsp;in extra revenue being collected so far, according to the Finance Ministry. That’s not much for a&nbsp;country of 5.3 million people… “The tax scheme was set up to allow those who want to pay more taxes to do so in a&nbsp;simple and straightforward way,” Finance Minister Siv Jensen said in an emailed comment. “If anyone thinks the tax level is too low, they now have the chance to pay more.” …Jonas Gahr Store, the wealthy Labor Party contender…, has so far refused to take up the government’s offer.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I’m not surprised that the ordinary people of Norway aren’t sending extra cash to their politicians.</p> <p>After all, the country already has a&nbsp;<a href="https://danieljmitchell.wordpress.com/2017/06/08/norways-version-of-the-resource-curse/" target="_blank">costly welfare state</a>&nbsp;financed by very high tax rates as well as lots of oil revenue. So why enable an even bigger burden of government?</p> <p>But Mr. Store hardly seems a&nbsp;very ethical proponent of higher taxes if he’s not willing to lead by example.</p> <p>Again, this is not very shocking. It’s a&nbsp;pattern among rich leftists.</p> <p><strong>The Biggest Proponents of Higher Taxes</strong></p> <p>The state of Massachusetts has a&nbsp;program for voluntary tax payments, but the Boston Globe&nbsp;<a href="https://www.bostonglobe.com/metro/2012/04/20/warren-acknowledges-she-does-not-opt-pay-higher-state-tax-rate/Bybb5jp6aIcFTxd2ekEAEO/story.html" target="_blank">revealed</a>&nbsp;that Elizabeth Warren somehow couldn’t bring herself to cough up additional money to finance bigger government.</p> </div> , <blockquote class="blockquote"> <div> <p>Elizabeth Warren acknowledged this morning that she does not pay a&nbsp;voluntary higher tax rate on her state income taxes, a&nbsp;question her campaign had previously refused to answer. …state Republicans have criticized Warren, who has earned a&nbsp;six‐​figure salary and owns assets worth millions, for her previous refusal to answer whether she pays a&nbsp;voluntary higher rate, calling her an “elitist hypocrite” who “lectures others about their responsibility to pay higher taxes.”</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>And John Kerry also decided that&nbsp;<a href="http://www.nationalreview.com/article/214716/hot-tax-deroy-murdock" target="_blank">he wouldn’t pay</a>&nbsp;extra tax to his state’s politicians.</p> </div> , <blockquote class="blockquote"> <div> <p>Sen. John Kerry (D. Mass.) sailed into hot water last year when tax returns revealed that he also paid the Bay State’s lower tax rate. …perhaps he intended to pay Massachusetts’ higher rate, but his calculator slid off his yacht.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Though Kerry&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/04/26/john-kerrys-tax-haven-investments-and-other-examples-of-statist-hypocrisy/" target="_blank">uses tax havens</a>&nbsp;to protect his wealth, and even keeps a&nbsp;yacht&nbsp;<a href="https://danieljmitchell.wordpress.com/2010/07/23/taxes-are-for-the-little-people-not-john-kerry/" target="_blank">in a&nbsp;neighboring low‐​tax state</a>, at least he’s consistent in his hypocrisy.</p> <p>Though&nbsp;<a href="http://nepr.net/post/voluntarily-pay-more-taxes-few-mass-opt-higher-rate#stream/0" target="_blank">according</a>&nbsp;to New England Public Radio, there are a&nbsp;few people in Massachusetts who actually do contribute extra money.</p> <p>Lenox accountant William Keen said it’s his job to save his clients money, so he just assumes they want to pay their state income tax at 5.1 percent, and not the optional rate of 5.85 percent.</p> </div> , <blockquote class="blockquote"> <div> <p>“If somebody specifically asked to be set at the higher rate, I&nbsp;would do it,” Keen said Friday. “Nobody has ever even asked for that. It’s never even come up.” And very few taxpayers across Massachusetts do pay at that higher rate. According to the state Department of Revenue, on average since 2002, 1,200 people each year check the box on the tax form to voluntarily pay more. That’s contributed to just over a&nbsp;quarter million dollars to the state’s coffers each year – a&nbsp;drop in the bucket since Massachusetts has a&nbsp;budget of about $40 billion.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I think people who deliberately over‐​pay to government are very misguided, but it’s better to be naive than to be hypocritical. Like&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/06/19/bill-and-hillary-hypocrisy-alert/" target="_blank">the Clintons</a>. And&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/10/13/hillary-clintons-destructive-and-grossly-hypocritical-plan-to-increase-the-death-tax/" target="_blank">Warren Buffett</a>. Or any of the&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/05/14/another-leftist-joins-the-hypocrite-hall-of-fame/" target="_blank">other rich leftists</a>&nbsp;who want higher taxes for you and me while engaging in very aggressive tax avoidance.</p> </div> Fri, 14 Jul 2017 10:30:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/what-happens-when-you-ask-pro-taxers-pay-more Health Costs Are Rising Because of Price Controls https://www.cato.org/publications/commentary/health-costs-are-rising-because-price-controls Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>When discussing government involvement in the health sector, I&nbsp;usually focus on the budgetary implications. Which makes sense since I’m a&nbsp;fiscal wonk and programs such as&nbsp;<a href="https://danieljmitchell.wordpress.com/2011/05/17/whos-right-on-medicare-reform-ryan-and-rivlin-or-obama-and-gingrich/" target="_blank">Medicare</a>,&nbsp;<a href="https://danieljmitchell.wordpress.com/2011/06/27/block-granting-medicaid-is-a-long-overdue-way-of-restoring-federalism-and-promoting-good-fiscal-policy/" target="_blank">Medicaid</a>, and&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/08/02/the-ever-growing-fiscal-burden-of-obamacare/" target="_blank">Obamacare</a>&nbsp;are diverting ever‐​larger amounts of money from the economy’s productive sector.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I also look at the tax side of the fiscal equation and complain about how the <a href="https://danieljmitchell.wordpress.com/2016/04/29/the-healthcare-exclusion-is-the-tax-codes-most-harmful-loophole/" target="_blank">healthcare exclusion</a> mucks up the tax code.</p> <p>Though it’s important to understand that government involvement doesn’t just cause fiscal damage. All these programs and policies contribute to the “third-party payer” problem, which exists when people make purchases with other people’s money.</p> <p class="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="42753bce-72ae-44f9-b40e-97d2441186df" data-langcode="en" class="embedded-entity"> <img width="598" height="448" alt="Media Name: consumer-mitchell.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/consumer-mitchell.jpg?itok=S_UTe4yv 1x, /sites/cato.org/files/styles/pubs_2x/public/consumer-mitchell.jpg?itok=K1w0bZ37 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/consumer-mitchell.jpg?itok=S_UTe4yv" typeof="Image" /></div> <p>Such a system is a <a href="https://danieljmitchell.wordpress.com/2015/05/24/government-subsidized-third-party-payer-is-a-great-recipe-to-make-a-sector-of-the-economy-more-expensive-and-less-efficient/" target="_blank">recipe for inefficiency and rising prices</a> since consumers generally don’t care about cost and providers have no incentive to be efficient. And since government figures show that <a href="https://danieljmitchell.wordpress.com/2009/12/28/the-real-healthcare-chart-of-the-day/" target="_blank">nearly 90 percent of health care expenditures</a> are financed by someone other than the consumer, this is <a href="https://danieljmitchell.wordpress.com/2017/03/23/the-worlds-most-inefficient-healthcare-system-part-ii-created-by-government-financed-by-government/" target="_blank">a major problem</a>. One that I’ve written about <a href="https://danieljmitchell.wordpress.com/2015/01/13/our-healthcare-policy-problem-is-much-bigger-than-obamacare/" target="_blank">many</a>, <a href="https://danieljmitchell.wordpress.com/2014/04/10/the-lefts-pro-single-payer-health-care-graphic-right-diagnosis-wrong-prescription/" target="_blank">many</a> times.</p> <p>But there’s another economic problem caused by government — price controls on insurance — that is very important. Indeed, the fights over “community rating” and “pre-existing conditions” are actually fights about whether <a href="https://danieljmitchell.wordpress.com/2015/11/07/if-we-want-prosperity-prices-should-be-determined-by-markets-rather-than-politicians/" target="_blank">politicians or competition should determine prices</a>.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Set aside that the entire purpose of insurance is to guard against risk. Instead, let’s focus on what happens when these types of price controls are imposed.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p><strong>The “Death Spiral”</strong></p> <p>Simply stated, politicians want insurance companies to ignore risk when selling insurance. They want artificially low premiums for old people, so they restrict differences in premiums based on age (i.e., a&nbsp;community rating, enforced by a&nbsp;guaranteed‐​issue mandate), even though older people are statistically far more likely to incur health‐​related expenses.</p> <p>They also want artificially low premiums for sick people, so the crowd in Washington requires that they pay the same or similar premiums as healthy people (i.e., a&nbsp;pre‐​existing conditions mandate), even though they are statistically far more likely to incur health‐​related expenses.</p> <p>Set aside that the entire purpose of insurance is to guard against risk. Instead, let’s focus on what happens when these types of price controls are imposed.</p> <p>For all intents and purposes, insurance companies are in a&nbsp;position where they have to over‐​charge young and healthy people in order to subsidize the premiums of old and sick people. That’s sounds great if you’re old and sick, but young and healthy people respond by choosing not to purchase insurance. And as fewer and fewer young and healthy people are in the system, that forces premiums ever higher. This is what is meant by a “<a href="https://danieljmitchell.wordpress.com/2016/01/12/more-perverse-but-predictable-economic-consequences-of-obamacare/" target="_blank">death spiral</a>.”</p> <p>The pro‐​intervention crowd has a&nbsp;supposed solution to this problem. Just impose a&nbsp;mandate that requires the young and healthy people to buy insurance.</p> <p>Which is part of Obamacare, so there is a&nbsp;method to that bit of madness. But since the penalties are not sufficiently punitive (and also because the government simply isn’t very competent), the system hasn’t worked.</p> <p>And to make matters worse, Obamacare exacerbated the third‐​party payer problem, thus leading to higher costs, which ultimately leads to higher premiums, which further discourages people from buying health insurance.</p> <p>So how do we solve this problem?</p> <p><strong>Race to the Bottom</strong></p> <p>One of my colleagues at the Cato Institute, Michael Cannon, is a&nbsp;leading expert on these issues. And he’s also a&nbsp;leading pessimist. Here’s some of what&nbsp;<a href="https://www.cato.org/publications/commentary/health-care-bill-would-rescue-obamacare-take-democrats-hook" target="_blank">he wrote a&nbsp;week ago</a>&nbsp;as part of a&nbsp;column on the Senate bill to modify Obamacare.</p> </div> , <blockquote class="blockquote"> <div> <p>ObamaCare’s “community rating” price controls are causing premiums to rise, coverage to get worse for the sick and insurance markets to collapse across the country. The Senate bill would modify those government price controls somewhat, allowing insurers to charge 64‐​year‐​olds five times what they charge 18‐​year‐​olds (as opposed to three times, under current law). But these price controls would continue to make a&nbsp;mess of markets and cause insurers to flee.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But he wasn’t enamored with the House proposal, either. Here are some excerpts from&nbsp;<a href="https://www.cato.org/blog/house-gop-leaderships-health-care-bill-obamacare-lite-or-worse" target="_blank">his analysis earlier this year</a>&nbsp;of that proposal.</p> </div> , <blockquote class="blockquote"> <div> <p>The House leadership bill retains the very ObamaCare regulations that are threatening to destroy health insurance markets and leave millions with no coverage at all. ObamaCare’s community‐​rating price controls literally penalize insurers who offer quality coverage to patients with expensive conditions, creating a&nbsp;race to the bottom in insurance quality. Even worse, they have sparked a&nbsp;death spiral that has caused insurers to flee ObamaCare’s Exchanges nationwide…</p> <p>The leadership bill would modify ObamaCare’s community‐​rating price controls by expanding the age‐​rating bands (from 3:1 to 5:1) and allowing insurers to charge enrollees who wait until they are sick to purchase coverage an extra 30 percent (but only for one year). It is because the House leadership would retain the community‐​rating price controls that they also end up retaining many other features of the law.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p><strong>Not Sustainable</strong></p> <p>Though existing law also is terrible, largely because of Obamacare. Here are passages from Michael’s&nbsp;<a href="http://thehill.com/blogs/pundits-blog/healthcare/331987-this-is-not-repeal-it-is-obamacare-lite-or-worse" target="_blank">column</a>&nbsp;in the Hill.</p> </div> , <blockquote class="blockquote"> <div> <p>ObamaCare’s core provisions are the “community rating” price controls and other regulations that (supposedly) end discrimination against patients with preexisting conditions. How badly do these government price controls fail at that task? Community rating is the reason former president Bill Clinton called ObamaCare “the craziest thing in the world” where Americans “wind up with their premiums doubled and their coverage cut in half.” Community rating is why women age 55 to 64 have seen the highest premium increases under ObamaCare. It is the principal reason ObamaCare has caused overall premiums to double in just four years.</p> <p>…Why? Because community rating forces insurance companies to cover the sick below cost, which simply isn’t sustainable. The only solution ObamaCare supporters offer is to keep throwing more money at the problem — which also isn’t sustainable.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Anyone who wants to really understand this issue should read all of Michael’s work on health care issues.</p> <p>But if you don’t have the time or energy for that, here’s an image that I&nbsp;found on Reddit‘s&nbsp;<a href="https://www.reddit.com/r/Libertarian/" target="_blank">libertarian page</a>. Using not‐​so‐​subtle sarcasm, it tells you everything you need to know about why price controls ultimately will kill health insurance.</p> <p>P.S. None of this suggests we should feel sorry for health insurance companies. They got in bed with the previous administration and endorsed Obamacare, presumably because they figured a&nbsp;mandate (especially with all the subsidies) would create captive customers.</p> <p>Now that it’s clear that the mandate isn’t working very well and that increased Medicaid dependency accounts for almost all of the additional “insurance coverage,” they’re left with an&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/07/15/obamacare-cronyism-and-bailouts-for-corrupt-health-insurance-companies/" target="_blank">increasingly dysfunctional system</a>. As far as I’m concerned, they deserve to lose money. And I&nbsp;definitely&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/01/03/tarp-was-bad-but-the-looming-obamacare-bailout-for-corrupt-insurance-companies-could-be-worse/" target="_blank">don’t want them to get bailout money</a>.</p> <p>P.P.S. Republicans aren’t doing a&nbsp;very good job of unwinding the Obamacare price controls, but they deserve a&nbsp;bit of credit for being bolder about&nbsp;<a href="https://danieljmitchell.wordpress.com/2017/03/14/two-cheers-for-the-fiscal-changes-in-the-gops-obamacare-repeal-and-replace-legislation/" target="_blank">trying to undo the fiscal damage</a>.</p> <p>Addendum: A&nbsp;<a href="https://danieljmitchell.wordpress.com/2017/07/01/in-one-image-everything-you-need-to-know-about-health-insurance-community-rating-and-pre-existing-conditions/#comment-179007" target="_blank">comment from Seb</a>&nbsp;reminds me that I&nbsp;was so fixated on criticizing price controls that I&nbsp;never bothered to explain how to deal with people who have pre‐​existing conditions and therefore cannot get health insurance.</p> <p>I’m guessing the answer is “high‐​risk pools” where the focus of policy is directly subsidizing the relatively small slice of the population that has a&nbsp;problem (as opposed to price controls and other interventions that distort the market for everyone). But the main goal, from my perspective, is to have states handle the issue rather than Washington.</p> <p>A federalist approach, after all, is more likely to give us the innovation, diversity, and competition that produces the best approaches. States may discover, after all, that insurance doesn’t make sense and choose to directly subsidize the provision of health care for affected people.</p> <p>In the long run, part of the solution is to&nbsp;<a href="https://danieljmitchell.wordpress.com/2013/12/27/a-manifesto-for-free-markets-in-health-care/" target="_blank">get rid of the health care exclusion</a>&nbsp;in the internal revenue code as part of&nbsp;<a href="https://danieljmitchell.wordpress.com/2012/08/11/a-primer-on-the-flat-tax-and-fundamental-tax-reform/" target="_blank">fundamental tax reform</a>. If that happened, it’s less likely that health insurance would be tied to employment (and losing a&nbsp;job is one of the main ways people wind up without insurance).</p> </div> Fri, 14 Jul 2017 10:21:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/health-costs-are-rising-because-price-controls The Real Reason Government Wastes So Much Money https://www.cato.org/publications/commentary/real-reason-government-wastes-so-much-money Daniel J. Mitchell <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Why does government&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/12/09/wasteful-spending-cost-overruns-and-the-never-ending-victimization-of-americas-taxpayers/" target="_blank">waste so much money</a>? In&nbsp;<a href="https://danieljmitchell.wordpress.com/2012/10/03/john-stossel-exposes-the-fraud-of-government-job-training-programs/" target="_blank">so many ways</a>? With&nbsp;<a href="https://danieljmitchell.wordpress.com/2013/04/15/an-aggravating-reminder-of-government-waste-on-tax-day/" target="_blank">such reckless abandon</a>?</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Simply stated, government programs are a&nbsp;magnet for scammers.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>I suppose I&nbsp;could answer with mockery and say it’s because they have&nbsp;<a href="https://danieljmitchell.wordpress.com/2014/10/23/wasting-money-is-washingtons-favorite-activity/" target="_blank">lots of experience</a>squandering our tax dollars.</p> <p>But let’s seriously contemplate that question and explore one of the reasons for waste. Simply stated, government programs are a&nbsp;magnet for scammers.</p> <p>Let’s look at three case studies.</p> <p><strong>Example #1</strong>: Fraud is&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/12/02/three-not-so-great-moments-in-government-run-healthcare/" target="_blank">an inherent part</a>&nbsp;of the big entitlement programs. Kevin Williamson has some unseemly details in&nbsp;<a href="http://www.nationalreview.com/article/449172/entitlement-fraud-control-medicare-medicaid-social-security-organized-crime" target="_blank">an article</a>&nbsp;for National Review.</p> </div> , <blockquote class="blockquote"> <div> <p>…you know where there’s a&nbsp;lot of waste, fraud, and abuse? Social Security, Medicare, and Medicaid. …Medicare and Medicaid together account for about $1 trillion in federal spending annually, and estimates suggest that $1 out of ever $10 of that spending is fraud. Some estimates go much higher. We do not have a&nbsp;very good idea of exactly how extensive fraud in the system is, because the federal government has put a&nbsp;fair amount of effort into not knowing.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>And what does that mean? How does the government try not to know?</p> </div> , <blockquote class="blockquote"> <div> <p>…the government’s approach long has been backward…investigators are asking whether a&nbsp;certain treatment was in fact appropriate for what ails Mrs. Jones, not whether Mrs. Jones exists.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>In other words, bureaucrats basically accept all claims as legitimate and simply judge from afar whether the right medical service is provided for the listed ailment.</p> <p>Even if the ailment is fictional. Or the patient is fake.</p> <p>As one might imagine, that kind of sloppy approach, combined with programs that dispense hundreds of billions of dollars, is a&nbsp;magnet for professional crooks.</p> </div> , <blockquote class="blockquote"> <div> <p>It’s the work of organized crime. As Sparrow points out, when there is a&nbsp;criminal case filed against one of these fraud artists, then billing in a&nbsp;particular category — some years ago, it was HIV fusion treatments — falls off steeply, by as much as 90 percent. The implication here is that fraudulent billing may make up the majority of Medicaid and Medicare spending in some categories. …organized‐​crime syndicates are being permitted to use our medical entitlements to loot the Treasury, and that not very much is being done about that, which suggests the possibility — only a&nbsp;possibility — that there is political collusion in this at some level.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>By the way, Kevin may be on to something when he speculates about collusion.</p> <p>We already know about&nbsp;<a href="https://danieljmitchell.wordpress.com/2015/11/05/instead-of-fighting-to-protect-taxpayers-politicians-are-enabling-medicare-fraud/" target="_blank">examples of politicians intervening to protect fraudsters</a></p> <p>(who, conveniently, also happen to be campaign donors).</p> <p>So is it really that much of a&nbsp;stretch to imagine them turning a&nbsp;blind eye (or worse) to industrial‐​level fraud by criminal enterprises?</p> <p>Leads me to think&nbsp;<a href="https://danieljmitchell.wordpress.com/2012/01/19/good-cartoon-about-organized-crime-and-government/" target="_blank">this cartoon</a>&nbsp;makes an unnecessary distinction.</p> <p><strong>Example #2</strong>: Welfare programs also are a&nbsp;magnet for fraud.</p> <p>Here are excerpts from a&nbsp;<a href="http://www.nbcnewyork.com/news/local/Another-12-People-Charged-in-Massive-Lakewood-New-Jersey-Welfare-Fraud-Crackdown-432905853.html" target="_blank">recent news report</a>.</p> </div> , <blockquote class="blockquote"> <div> <p>Another six Lakewood, New Jersey couples were charged Wednesday with welfare fraud, bringing to 26 the number of people implicated since last week in the multimillion‐​dollar scandal. At the heart of the charges is the allegation that they all, in one way or another, failed to report or otherwise concealed significant income that would have made them ineligible for the assistance programs in which they enrolled. In total, state and federal prosecutors have said the families collected more than $2.4 million in benefits. …They allegedly obtained nearly $400,000&nbsp;in Medicaid, food and heating benefits fraudulently. …Four other couples were arrested June 26 for allegedly defrauding public assistance programs of more than $1.3 million in benefits.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Welfare fraud must have been a&nbsp;major pastime for residents of the town.</p> <p>Hundreds of these moochers are now trying to cover their tracks in hopes of avoiding legal trouble.</p> <p>The specter of more charges has shaken Lakewood. Hundreds of residents have contacted authorities seeking amnesty or help avoiding arrest, the Asbury Park Press reported on June 29. In addition to the hundreds seeking amnesty, dozens more people have contacted social service agencies to cancel their benefits or declare income.</p> <p><strong>Example #3</strong>: And&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/12/08/great-moments-in-pentagon-incompetence-and-waste/" target="_blank">nobody should be surprised</a>&nbsp;to learn that there’s plenty of fraud at the Pentagon.</p> <p>Here’s&nbsp;<a href="http://www.pennlive.com/news/2017/03/pa_defense_contractor_bilked_u.html" target="_blank">an example</a>&nbsp;that seems very representative.</p> </div> , <blockquote class="blockquote"> <div> <p>The former owners of a&nbsp;Pittsburgh‐​area military supplier have been accused of defrauding the U.S. government of more than $6 million in defense contract work. …Prosecutors allege the Buckners inflated the cost of the work by falsifying invoices to make it appear as though they had spent $70 per window frame for the materials when in fact they had paid just $20 each for frames manufactured in China. The brothers are also alleged to have sold scrap aluminum collected in the manufacturing process without crediting that money to TACOM. The losses to TACOM are placed at $6,085,709 by the DOJ.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But that’s just the tip of the iceberg.</p> </div> , <blockquote class="blockquote"> <div> <p>In 2014, a&nbsp;defense contractor responsible for providing food and water to troops in Afghanistan pleaded guilty to over‐​charging the U.S. government to the tune of $48 million. This week, two San Diego defense contractors pleaded guilty in a&nbsp;scheme that defrauded the Navy out of at least $1.4 million by over‐​billing for supplies that the military never ordered, the San Diego Union‐​Tribune reported. Similar stories have cropped up in Florida, California, Maryland, North Carolina and elsewhere in recent years, renewing calls for systemic reforms.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Maybe the reason fraud is so pervasive is that penalties are trivial or nonexistent.</p> </div> , <blockquote class="blockquote"> <div> <p>A 2011 DOD report found hundreds of defense contractors that defrauded the U.S. military subsequently went on to receive more than $1.1 trillion in new Pentagon contracts between 2000 and 2010.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Shouldn’t criminal companies be barred from subsequent contracts? Shouldn’t crooked company officials be sent to prison?</p> <p>Or do these things not happen because the same folks are also campaign contributors?</p> <p>I don’t know the answer to these questions, but surely&nbsp;<a href="https://danieljmitchell.wordpress.com/2016/05/18/government-corruption-undeserved-wealth-insider-favoritism/" target="_blank">something is amiss</a>. It’s almost as if government is simply&nbsp;<a href="https://danieljmitchell.wordpress.com/2013/12/23/its-a-very-merry-christmas-for-washingtons-parasite-class/" target="_blank">a&nbsp;racket</a>&nbsp;for the benefit of insiders.</p> </div> Thu, 13 Jul 2017 09:36:00 -0400 Daniel J. Mitchell https://www.cato.org/publications/commentary/real-reason-government-wastes-so-much-money Daniel J. Mitchell discusses Seattle’s tax hike on FBN’s Risk & Reward with Deirdre Bolton https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-seattles-tax-hike-fbns-risk-reward Wed, 12 Jul 2017 10:53:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-seattles-tax-hike-fbns-risk-reward In Just Six Minutes, Everything You Need to Know about Spending Caps https://www.cato.org/blog/just-six-minutes-everything-you-need-know-about-spending-caps Daniel J. Mitchell <p>Back in April, I <a href="https://danieljmitchell.wordpress.com/2017/04/10/new-video-shows-the-simple-recipe-for-poor-nations-to-become-rich-nations-in-spite-of-bad-advice-from-international-bureaucracies/">shared a new video</a> from the Center for Freedom and Prosperity that explained how poor nations can become rich nations by following the <a href="https://danieljmitchell.wordpress.com/2012/02/23/whats-the-recipe-for-growth-and-prosperity/">recipe of small government and free markets</a>. <br /><br /><br /> Now CF&amp;P has released another video. Narrated by Yamila Feccia from Argentina, it succinctly explains — using both theory and evidence — why spending caps are the most prudent and effective way of achieving good fiscal results. <br /><br /><br /> [embed]<a href="https://www.youtube.com/watch?v=JZOwaIzW0xY[/embed]&amp;#13">https://www.youtube.com/watch?v=JZOwaIzW0xY[/embed]&amp;#13</a>;<br /><br /><br /> Ms. Feccia covers all the important issues, but here are five points that are worth emphasizing. <br /></p> <ol><li>Demographics — Almost all developed nations have <a href="https://danieljmitchell.wordpress.com/2015/10/30/the-fiscal-nightmare-of-changing-demographics-combined-with-poorly-designed-entitlement-programs/">major long‐​run fiscal problems</a> because welfare states will implode because of aging populations and falling birthrates (Ponzi schemes need an ever‐​growing number of new people to stay afloat).</li> <li>Golden Rule — If government spending <a href="https://danieljmitchell.wordpress.com/2011/10/30/mitchells-golden-rule/">grows slower than the private sector</a>, that reduces the relative burden of government spending (the <a href="https://danieljmitchell.wordpress.com/2009/12/15/the-problem-is-spending-not-deficits/">underlying disease</a>) and also reduces red ink (the <a href="https://danieljmitchell.wordpress.com/2010/04/09/americas-fiscal-problem-is-spending-not-deficits/">symptom of the underlying disease</a>).</li> <li><a href="https://danieljmitchell.wordpress.com/2014/04/07/the-golden-rule-of-spending-restraint/"><br /><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="e1431dbc-6d4c-479b-b6bc-9a8bf2628389" class="align-right embedded-entity" data-langcode="und"> <img srcset="/sites/cato.org/files/styles/pubs/public/download-remote-images/danieljmitchell.files.wordpress.com/146146669666/golden-rule-examples.jpg?itok=ZkcstIDn 1x, /sites/cato.org/files/styles/pubs_2x/public/download-remote-images/danieljmitchell.files.wordpress.com/146146669666/golden-rule-examples.jpg?itok=Yl2QyPOb 1.5x" width="621" height="441" src="/sites/cato.org/files/styles/pubs/public/download-remote-images/danieljmitchell.files.wordpress.com/146146669666/golden-rule-examples.jpg?itok=ZkcstIDn" alt="Golden Rule Examples" typeof="Image" class="component-image" /></div> <p></p></a>Success Stories — Simply stated, spending caps work. She lists the nations that have <a href="https://danieljmitchell.wordpress.com/2014/04/07/the-golden-rule-of-spending-restraint/">achieved very good results</a> with multi‐​year periods of spending restraint. She points out that <a href="https://danieljmitchell.wordpress.com/2014/12/02/two-very-depressing-charts-for-president-obama-two-very-encouraging-charts-for-americas-taxpayers/">the U.S. made a lot of fiscal progress</a> when GOPers aggressively fought Obama. And she shares the details about the <a href="https://danieljmitchell.wordpress.com/2014/12/02/two-very-depressing-charts-for-president-obama-two-very-encouraging-charts-for-americas-taxpayers/">very successful constitutional spending caps</a> in Hong Kong and Switzerland.</li> <li>Better than Balanced Budget Amendments or Anti‐​Deficit Rules — The video explains why policies that try to target red ink are not very effective, mostly because tax revenues are very volatile.</li> <li>Even International Bureaucracies Agree — Remarkably, the <a href="https://danieljmitchell.wordpress.com/2015/03/16/to-control-leviathan-even-the-imf-agrees-that-spending-caps-are-far-more-effective-than-balanced-budget-requirements/">International Monetary Fund</a> (<a href="https://danieljmitchell.wordpress.com/2015/05/25/balanced-budget-requirements-dont-work-as-well-as-spending-limits/">twice</a>!), the <a href="https://danieljmitchell.wordpress.com/2015/12/18/more-evidence-from-the-establishment-for-spending-caps/">European Central Bank</a>, and the <a href="https://danieljmitchell.wordpress.com/2015/11/11/even-the-oecd-now-admits-spending-caps-are-the-only-effective-way-of-restraining-government/">Organization for Economic Cooperation and Development</a> (<a href="https://danieljmitchell.wordpress.com/2016/07/16/more-evidence-that-balanced-budget-rules-dont-work-as-well-as-spending-caps/">twice</a>!) have acknowledged that spending caps are the most, if not only, effective fiscal rule.</li> </ol><p>I touch on some of these issues in <a href="https://object.cato.org/sites/cato.org/files/serials/files/cato-handbook-policymakers/2017/2/cato-handbook-for-policymakers-8th-edition-24_0.pdf">one of my chapters</a> in the <em>Cato Handbook for Policymakers</em>. The entire chapter is worth reading, in my humble opinion, but I want to share an excerpt echoing Point #4 that I just shared from Ms. Feccia’s video. <br /></p> <blockquote><p>There’s a very practical reason to focus on capping long‐​run spending rather than trying to balance the budget every year. Simply stated, the “business cycle” makes the latter very difficult. …when a recession occurs and revenues drop, a balanced‐​budget mandate requires politicians to make dramatic changes at a time when they are especially reluctant to either raise taxes or impose spending restraint. Then, when the economy is enjoying strong growth and producing lots of tax revenue, a balanced‐​budget requirement doesn’t impose much restraint on spending. All of which creates an unfortunate cycle. Politicians spend a lot of money during the good years, creating expectations of more and more money for various interest groups. When a recession occurs, the politicians suddenly have to slam on the brakes. But even if they actually cut spending, it is rarely reduced to the level it was when the economy began its upswing. Moreover, politicians often raise taxes as part of these efforts to comply with anti‐​deficit rules. When the recession ends and revenues begin to rise again, the process starts over—this time from a higher base of spending and with a bigger tax burden. Over the long run, these cycles create a ratchet effect, with the burden of government spending always reaching new plateaus.</p> </blockquote> <p>It’s not that I want to belabor this point, but the bottom line is that it is very difficult to amend a country’s constitution (at least in the United States, but presumably in other nations as well). <br /><br /><br /> So if there’s going to be a major campaign to put a fiscal rule in a constitution, then I think it should be one that actually achieves the goal. And whether people want to address the economically important goal of spending restraint or the symbolically important goal of fiscal balance, what should matter is that a spending cap is <a href="https://danieljmitchell.wordpress.com/2016/12/24/all-i-want-for-christmas-is-a-spending-cap/">the effective way</a> of getting there.</p> Tue, 11 Jul 2017 09:22:05 -0400 Daniel J. Mitchell https://www.cato.org/blog/just-six-minutes-everything-you-need-know-about-spending-caps Daniel J. Mitchell discusses demographics on FBN’s Risk & Reward with Deirdre Bolton https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-demographics-fbns-risk-reward-deirdre Mon, 10 Jul 2017 10:55:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-demographics-fbns-risk-reward-deirdre Daniel J. Mitchell discusses the CBO estimating that the federal government will spend $4 Trillion dollars for the first time on FBN’s Cavuto Coast to Coast https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-cbo-estimating-federal-government-will Fri, 07 Jul 2017 14:49:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-cbo-estimating-federal-government-will Daniel J. Mitchell discusses several topics on FBN’s After the Bell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-several-topics-fbns-after-bell Thu, 06 Jul 2017 14:45:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-several-topics-fbns-after-bell Daniel J. Mitchell discusses the Illinois budget crisis on FBN’s Mornings with Maria https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-illinois-budget-crisis-fbns-mornings Wed, 05 Jul 2017 11:25:00 -0400 Daniel J. Mitchell https://www.cato.org/multimedia/media-highlights-tv/daniel-j-mitchell-discusses-illinois-budget-crisis-fbns-mornings